The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details about how these pricing practices affect consumer privacy, competition, and overall consumer protection.
These companies employ techniques labeled “surveillance pricing” or “dynamic pricing,” where varying prices for the same products are shown to different customers based on various factors such as location, demographics, credit history, and online shopping behaviors.
Many of the firms targeted by the FTC provide essential transaction and pricing services to major U.S. and international corporations. For instance, Task Software manages transactions for leading hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and serves clients such as Home Depot. Pros offers AI-driven pricing solutions to companies like Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
FTC Chair Lina Khan emphasized the need for clarity in this complex pricing landscape. She stated, “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 aims to gather information related to four main areas: the types of surveillance pricing products and services each company offers; their data collection methods; customer and sales data; and the influence of these surveillance practices on the final prices paid by consumers.