The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC aimed at understanding how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, such as artificial intelligence, to implement a practice referred to as “surveillance pricing” or “dynamic pricing.” This strategy allows them to display varying prices for the same products based on consumer characteristics and behaviors, which can encompass factors like location, demographics, credit history, and online shopping patterns.
The firms under scrutiny largely provide transaction, sales, and pricing services to some of the largest corporations in the United States and worldwide. Task Software is known for managing transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization solutions to global retailers including Home Depot. Pros, which markets AI-driven solutions for pricing, counts Nestlé, HP, and United Airlines as clients, and collaborates with Microsoft in technology development.
The FTC aims to clarify this “opaque market” that categorizes consumers and applies targeted pricing to products and services. FTC Chair Lina Khan emphasized the potential risks to consumer privacy posed by companies that collect extensive personal data, stating that these businesses could be using this information to impose 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,” she stated.
The FTC’s investigation focuses on four primary areas: the types of surveillance pricing solutions offered by each company; the methods of data collection; customer and sales information; and the impact of these practices on consumer pricing.