The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
Eight major firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered to provide information related to these practices that potentially affect privacy, competition, and consumer protection.
These companies utilize data-driven methods, commonly referred to as “surveillance pricing” or “dynamic pricing,” to present varying prices for identical products based on consumer attributes such as location, demographics, credit history, and purchasing behavior.
Many of the firms under scrutiny play crucial roles in providing transaction and pricing services to major corporations in the U.S. and worldwide. For instance, Task Software manages transaction processes for notable hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to major retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft in technology development.
The FTC aims to explore the complexities of this “opaque market” known for profiling consumers and establishing targeted prices. FTC Chair Lina Khan expressed concern, 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.” She added that the inquiry seeks to uncover whether detailed consumer data is being used for surveillance pricing, thus illuminating the obscure framework of pricing intermediaries.
The FTC’s investigation will focus on four primary areas: the types of surveillance pricing products and services offered, methods of data collection, customer and sales data, and the influence of these practices on consumer pricing.