The Federal Trade Commission (FTC) has initiated an investigation into several major firms regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing. The investigation encompasses eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which were ordered to provide details about their pricing practices.
The inquiry focuses on a pricing strategy known as “surveillance pricing,” also referred to as “dynamic pricing.” This method allows businesses to present varying prices for the same products based on individual customer traits such as location, demographics, credit history, and online behavior.
Many of the firms being investigated support substantial customer transactions. For instance, Task Software is involved in transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics offers pricing analytics for retailers, including Home Depot, while Pros provides AI-driven pricing solutions for notable clients such as Nestlé and United Airlines, and partners with Microsoft in technology development.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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.” The FTC aims to uncover whether businesses are misusing detailed consumer data to implement these pricing strategies.
The investigation seeks to understand several critical aspects: the products and services related to surveillance pricing offered by each company, data collection methods, insights into customer and sales data, and the impact of these practices on consumer pricing.
This investigation sheds light on the complexities of pricing practices in the digital age and aims to protect consumers from potential unfair practices. It is a hopeful move towards greater transparency and accountability in how companies handle personal data and pricing strategies, ultimately benefiting consumers.
Summary: The FTC is investigating eight major companies over their use of AI and data in personalized pricing strategies, assessing potential risks to consumer privacy and fairness. The inquiry aims to promote transparency in how firms collect and utilize consumer data.