The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their practices of using customer data, algorithms, and artificial intelligence to customize pricing for individuals.
Eight companies spanning different sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received orders from the FTC on Tuesday requesting details on how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as AI, to implement what is referred to as “surveillance pricing” or “dynamic pricing,” which presents customers with varying prices for the same product based on individual characteristics or behavior. Factors influencing these pricing variations can include location, demographics, credit history, and online shopping behavior.
Many of the firms involved provide significant transaction, sales, and pricing services to some of the largest corporations in the U.S. and internationally. For instance, Task is known for managing transactions for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization solutions to global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts major clients such as Nestlé, HP, and United Airlines, and is a technology development partner with Microsoft.
The FTC aims to investigate this “opaque market” that categorizes consumers and sets targeted prices based on distinct data points.
“Companies that collect personal data from Americans pose a potential risk to privacy. Now, they could be using this extensive reservoir of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers deserve transparency regarding whether their detailed data is being used to support surveillance pricing, and this inquiry will illuminate the obscure dynamics of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the effects of these practices on the prices customers pay.