The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
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The FTC has issued orders to eight firms including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting information on how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data-driven strategies, referred to as “surveillance pricing” or “dynamic pricing,” to offer different prices for the same products based on individual consumer data such as location, demographics, credit history, and shopping habits.
Many businesses approached by the FTC are key players in transaction, sales, and pricing services for major U.S. and international firms. Task Software manages transactions for notable hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and provides analytics to various global retailers like Home Depot. Pros, known for AI-powered pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to uncover the complexities of the “opaque market” that identifies consumers and assigns targeted prices for 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’s inquiry focuses on four main areas: the types of surveillance pricing solutions offered by each company, their data collection methods, customer and sales data, and the influence of these practices on the final prices paid by consumers.