The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of consumer data, algorithms, and artificial intelligence to set personalized pricing strategies.
The FTC issued inquiries on Tuesday to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing practices impact privacy, competition, and consumer protection.
Many of these organizations utilize data-driven tools, such as artificial intelligence, in a practice known as “surveillance pricing” or “dynamic pricing.” This approach enables companies to present different prices for the same products based on individual consumer characteristics, such as location, demographics, credit history, and shopping habits.
Several of the firms contacted by the FTC offer transaction, sales, and pricing solutions to major corporations both in the U.S. and internationally. For instance, Task Software is involved in transaction management for significant hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization and analytics for companies including Home Depot. Pros claims to provide AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clients. Additionally, Pros is a technology development partner of Microsoft.
The FTC aims to uncover the details of what it terms an “opaque market,” in which consumers are categorized and targeted with varied prices for goods and services.
FTC Chair Lina Khan remarked, “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 agency is specifically seeking information in four main areas: the types of surveillance pricing products and services available, methods of data collection, customer and sales information, and the impact of these practices on consumer pricing.