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.
The inquiry targets eight companies from various industries: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide information about how their pricing practices affect privacy, competition, and consumer protection.
Companies utilize tools such as artificial intelligence to implement what is known as “surveillance pricing,” or “dynamic pricing,” which allows them to display different prices to consumers based on various personal attributes, including location, demographics, credit history, and online shopping behavior.
Many of these contacted companies supply transaction, sales, and pricing services to major businesses in the U.S. and internationally. For instance, Task Software manages transactions for prominent hospitality brands like McDonald’s and Starbucks, while Revionics offers price optimization software to global retailers like Home Depot. Pros, which focuses on AI-driven pricing solutions, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft for technology development.
The FTC aims to clarify this “opaque market” where customer data is harvested to establish targeted pricing for goods 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 commission’s investigation focuses on four main areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales information, and the effect of these practices on the prices that consumers ultimately pay.