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, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued orders by the FTC on Tuesday to provide information on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, often referred to as “surveillance pricing” or “dynamic pricing,” which enable them to display varied prices for the same products to different consumers based on particular traits or behaviors. Factors such as location, demographics, credit history, and browsing or shopping history can influence these price variations.
Many of the firms contacted by the FTC offer transaction, sales, and pricing services to some of the largest companies in the United States and around the world. Task Software, for instance, manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to several global retailers, including Home Depot. Pros, which markets itself as an AI-powered pricing solutions provider, has notable clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to investigate this “opaque market” where consumers are categorized and targeted with specific pricing for various products and services. FTC Chair Lina Khan stated, “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 regulatory body is seeking details on four main aspects: the types of surveillance pricing products and services offered by each company; their data collection methods; customer and sales information; and the ways these surveillance practices impact the final prices customers pay.