The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing.
The agencies involved include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, the FTC issued orders seeking information about how these pricing methods affect privacy, competition, and consumer protection.
The practice under scrutiny is known as “surveillance pricing” or “dynamic pricing,” where companies use data tools to display different prices for the same products to various consumers based on their characteristics or behaviors. Factors influencing this include location, demographics, credit history, and online shopping habits.
Many of the firms being examined provide transaction, sales, and pricing services to major corporations in the U.S. and internationally. Task Software aids numerous prominent hospitality brands, such as McDonald’s and Starbucks, whereas Revionics specializes in retail price optimization software used by various global chains like Home Depot. Pros, which offers AI-driven pricing solutions, serves clients, including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
Through this investigation, the FTC aims to clarify the mechanisms of the “opaque market” that categorizes consumers and sets targeted pricing strategies.
FTC Chair Lina Khan commented, “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices. Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The agency is seeking insights into four primary areas: the types of surveillance pricing solutions offered by each company, methods of data collection, customer and sales information, and the impact of these surveillance practices on consumer pricing.