The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
The companies under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued information requests to these eight firms to understand how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as AI, to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which enables them to display varying prices for the same products based on individual consumer characteristics and behaviors, including location, demographics, credit history, and shopping history.
Many of the firms contacted by the FTC are involved in transaction, sales, and pricing services for major corporations in the United States and around the globe. Task Software is known for its management services for well-known hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics, serving clients such as Home Depot. Pros offers AI-driven pricing solutions and lists prominent companies like Nestlé, HP, and United Airlines as its clients, and it is also a technology development partner with Microsoft.
The investigation seeks to clarify the workings of an “opaque market” that utilizes consumer categorization to establish targeted pricing for products and services.
FTC Chair Lina Khan emphasized the concerns surrounding personal data, stating, “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 FTC is particularly focused on four main areas: the specific surveillance pricing products and services provided by each company, the methods of data collection, customer and sales information, and the influence of these surveillance practices on the pricing that consumers ultimately pay.