The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their utilization of customer data, algorithms, and artificial intelligence to create individualized pricing strategies.
On Tuesday, the regulatory body issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details on how these pricing methods affect privacy, competition, and consumer protection.
Companies employ methods like “surveillance pricing” or “dynamic pricing” that adjust prices based on individual consumer factors such as location, demographics, credit history, and browsing or shopping habits.
Many of the firms under scrutiny provide transaction, sales, and pricing services for some of the largest companies both in the U.S. and abroad. Task Software manages transactions for major hospitality brands including McDonald’s and Starbucks, while Revionics offers price optimization and analytics services to retail giants like Home Depot. Pros, which promotes AI-driven solutions for pricing, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the “opaque market” that delineates shoppers and establishes targeted pricing for various products and services.
“Firms that harvest Americans’ personal data can jeopardize individuals’ privacy. There is a risk that these companies might exploit extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are using detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this inscrutable realm of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by these companies; data collection methods; details on customer and sales data; and the influence of these practices on the prices that consumers ultimately pay.