The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
Eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency seeks detailed information on how these pricing strategies may affect privacy, competition, and consumer protection.
These companies engage in a practice referred to as “surveillance pricing,” also known as “dynamic pricing,” where they present different prices to consumers based on factors like location, demographics, credit history, and browsing or shopping behavior.
Most of the firms contacted by the FTC are significant providers of transaction, sales, and pricing services both in the U.S. and internationally. Notably, Task Software is involved with major hospitality brands, including McDonald’s and Starbucks, while Revionics supplies retail price optimization tools to notable retailers like Home Depot. Pros, which positions itself as an AI-driven pricing solutions provider, counts major corporations such as Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the workings of this “opaque market” that organizes consumers and assigns targeted prices for various products and services.
“Businesses that collect substantial amounts of personal data can jeopardize consumer privacy. Now, there’s concern that they may exploit this information to impose higher prices on individuals,” stated FTC Chair Lina Khan. “Consumers have the right to understand if their personal data is being used for surveillance pricing, and this investigation will aim to illuminate the unclear world of pricing intermediaries.”
The FTC is requesting information focusing on four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and how these surveillance practices affect the prices customers ultimately pay.