The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their practices surrounding customer data, algorithms, and artificial intelligence in setting personalized pricing.
On Tuesday, the agency issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how these pricing strategies affect privacy, competition, and consumer protection.
These companies employ data tools to implement what is known as “surveillance pricing” or “dynamic pricing,” which allows them to offer various prices for the same products based on individual consumer attributes, such as location, demographics, credit history, and shopping behavior.
Many of the firms targeted in the FTC’s inquiry provide transaction, sales, and pricing services to some of the largest businesses at both national and global levels. Task, for instance, is the transaction management service for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies price optimization software to retailers such as Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft in technology development.
The FTC aims to investigate the “opaque market” that categorizes consumers and determines targeted pricing for products and services.
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. 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 is specifically looking for information in four main areas: the types of surveillance pricing products and services offered by each company; their data collection methods; customer and sales information; and how these practices affect the prices consumers ultimately pay.