The Federal Trade Commission (FTC) has initiated an investigation into several leading firms regarding their utilization of customer data, algorithms, and artificial intelligence to customize pricing on an individual basis.
Eight companies across various sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—were served with orders from the FTC on Tuesday. The agency is seeking information on how these pricing strategies affect privacy, competition, and consumer protection.
Businesses are employing methods such as “surveillance pricing” or “dynamic pricing” to present different prices to consumers for identical products, based on individual attributes and behaviors. Factors influencing these practices can include a consumer’s location, demographics, credit history, and online shopping habits.
Many of the firms contacted by the FTC offer transaction, sales, and pricing services to some of the largest corporations both in the U.S. and worldwide. Task Software, for instance, manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics, catering to global chains like Home Depot. Pros, which focuses on AI-driven pricing solutions, counts among its clients big names like Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to clarify the complexities of a market that categorizes consumers and sets targeted prices. FTC Chair Lina Khan stated, “Companies that collect Americans’ personal data can jeopardize privacy. Now firms could be using this extensive personal information to impose higher prices. Americans deserve transparency about whether businesses are employing detailed consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this concealed ecosystem of pricing intermediaries.”
The FTC is seeking information in four main areas: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the influence of these practices on the pricing consumers ultimately pay.