The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information about the effects of these pricing practices on privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as AI, to implement what is referred to as “surveillance pricing” or “dynamic pricing.” This approach means that consumers may see different prices for the same products based on various factors like location, demographics, credit history, and their previous shopping or browsing behavior.
Many of the firms under scrutiny offer transaction, sales, and pricing services to some of the largest businesses both in the United States and around the world. Task Software is involved in transaction management for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software utilized by large chains like Home Depot. Pros is a technology firm that claims to provide AI-based pricing solutions and has clients such as Nestlé, HP, and United Airlines. It also partners with Microsoft for technology development.
The FTC aims to investigate the shady marketplace that targets consumers with specific prices based on their data profiles. 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 focusing on four main areas: the types of surveillance pricing products and services offered by each company, their methods of data collection, customer and sales information, and how these pricing practices affect consumer pricing.