The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for consumers.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC, which seeks information on how these pricing strategies affect privacy, competition, and consumer protection.
Companies utilize data tools and practices known as “surveillance pricing” or “dynamic pricing” to present varying prices to consumers for the same products based on individual characteristics such as location, demographics, credit history, and browsing or shopping history.
Many companies contacted by the FTC offer transaction, sales, and pricing services to some of the largest businesses both in the U.S. and globally. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for various global chains, such as Home Depot. Pros, which offers AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients, and has a technology partnership with Microsoft.
The FTC aims to clarify the “opaque market” that categorizes consumers and sets targeted prices 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 focusing its investigation on four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and how these surveillance practices affect the final prices customers pay.