The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of consumer data, algorithms, and artificial intelligence in setting personalized pricing.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received orders from the FTC on Tuesday, demanding information about how these practices affect privacy, competition, and consumer protection.
Companies utilize data-driven methods, referred to as “surveillance pricing” or “dynamic pricing,” to present varying prices for the same products based on individual consumer characteristics or behaviors. Factors such as location, demographics, credit history, and online activity can influence these prices.
Many of the investigated firms offer transaction and pricing services to major businesses within the United States and around the world. Task Software manages transactions for notable hospitality brands such as McDonald’s and Starbucks. Revionics supplies retail price optimization software to various global chains, including Home Depot. Pros, which markets itself as a provider of AI-based pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to understand the complexities of this “opaque market,” where customers are categorized, and targeted prices are established for different products and services.
FTC Chair Lina Khan 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 is seeking information on four main areas: the types of surveillance pricing products and services each company offers; the methods of data collection; customer and sales information; and the impact of these practices on the final prices consumers pay.