The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, to assess the implications of these practices on privacy, competition, and consumer protection.
These companies utilize data tools and techniques, often referred to as “surveillance pricing,” to display varying prices to consumers based on their individual characteristics or behaviors, such as location, demographics, credit history, and online activity.
Notably, some of these firms provide transaction and pricing services to significant businesses both in the U.S. and internationally. Task Software, for example, manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for companies such as Home Depot. Pros, recognized for its AI-powered pricing solutions, serves clients including Nestlé, HP, and United Airlines and is a technology partner of Microsoft.
Through this inquiry, the FTC aims to clarify the complexities of the market that segments shoppers and determines targeted pricing. FTC Chair Lina Khan emphasized the potential privacy risks posed by companies that collect large amounts of personal data and hinted at the possibility that this information might be used to justify higher prices for certain consumers. She stated, “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’s investigation will focus on four main areas: the types of surveillance pricing services each company provides; their data collection methods; customer and sales information; and the influence of these practices on the prices customers pay.