The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC on Tuesday for information concerning the implications of this pricing strategy on privacy, competition, and consumer protection.
Companies are known to utilize data tools, including AI, in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products depending on consumer traits and behaviors. Factors influencing this pricing may include the consumer’s location, demographics, credit history, as well as their browsing or shopping patterns.
Many of the firms contacted by the FTC offer transaction and pricing services to major businesses both domestically and internationally. For instance, Task Software facilitates transaction management for prominent hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and provides pricing analytics for global companies such as Home Depot. Pros is an AI-driven software provider for pricing solutions and counts notable organizations like Nestlé, HP, and United Airlines as clients. The company also partners with Microsoft for technology development.
The FTC aims to clarify the workings of this “opaque market,” which categorizes consumers and determines targeted pricing strategies for various products and services.
“The harvesting of Americans’ personal data poses significant privacy risks. Firms may be using this extensive personal information to impose higher prices on consumers,” stated FTC Chair Lina Khan. “Americans have a right to understand if businesses are employing sophisticated consumer data to implement surveillance pricing, and the FTC’s inquiry will illuminate this hidden pricing landscape.”
The FTC is seeking information in four primary areas: types of surveillance pricing solutions offered by each company, data collection methods, customer and sales data, and the effect of these surveillance practices on the prices charged to consumers.