The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the agency. The FTC is examining how these pricing methods potentially affect privacy, competition, and consumer rights.
Utilizing tools such as AI, businesses engage in what is referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same product based on individual consumer traits or behaviors. Factors influencing these price variations may include a customer’s location, demographics, credit history, and online shopping habits.
Many of the businesses under scrutiny provide essential transaction, sales, and pricing services to some of the largest corporations in the United States and around the world. Task Software is recognized for its transaction management services for several leading hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to notable global retailers such as Home Depot. Pros, a software company highlighting its AI-driven pricing solutions, counts major corporations like Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the complexities of a market that reportedly categorizes consumers and applies targeted pricing strategies.
FTC Chair Lina Khan emphasized the concerns regarding consumer privacy, stating, “Companies that collect personal data from Americans can jeopardize people’s privacy. They might even be using this personal information to impose higher prices. Americans should be informed if businesses are leveraging detailed consumer data to implement surveillance pricing, and the FTC’s investigation will illuminate this opaque landscape of pricing intermediaries.”
The FTC seeks details in four primary areas: the specific surveillance pricing products and services each company provides, the methods of data collection, customer and sales information, and the impact of these pricing practices on the final prices consumers pay.