The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been requested by the agency to provide information on how these pricing techniques affect privacy, competition, and consumer protection.
These companies utilize data tools, engaging in what is termed “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer characteristics and behaviors. Factors influencing this pricing may include a customer’s location, demographics, credit history, and browsing or shopping habits.
Many of the firms approached by the FTC offer transaction, sales, and pricing services to prestigious companies both in the U.S. and internationally. For instance, Task Software manages transactions for leading hospitality chains like McDonald’s and Starbucks, while Revionics provides retail price optimization tools to several global brands, including Home Depot. Pros, which emphasizes its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and has a technology partnership with Microsoft.
The FTC aims to investigate this “opaque market” where consumer profiling may influence pricing decisions. FTC Chair Lina Khan highlighted that companies utilizing personal data could compromise individual 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 seeking insights in four primary areas: the surveillance pricing products and services each company provides; the methods they use for data collection; customer and sales information; and the ways in which these practices affect the final prices paid by customers.