The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation affects eight companies from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these firms to provide information about how their pricing practices impact privacy, competition, and consumer protection.
These companies utilize data tools, such as AI, to implement a strategy referred to as “surveillance pricing,” also known as “dynamic pricing.” This practice allows them to present different prices to different consumers for the same products based on various factors including location, demographics, credit history, and browsing or shopping habits.
Many of these firms offer transaction, sales, and pricing services to major corporations in the U.S. and worldwide. Task Software manages transactions for several notable hospitality businesses, including McDonald’s and Starbucks, while Revionics delivers retail price optimization software to chains like Home Depot. Pros, which provides AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” where consumer categorization occurs, determining the targeted prices set for goods and services.
“Companies that collect personal data from Americans risk compromising their privacy. There is concern that these firms may be taking advantage of extensive consumer information to impose higher charges,” said FTC Chair Lina Khan. “Americans deserve transparency regarding whether businesses are using detailed consumer data to implement surveillance pricing, and this inquiry will illuminate the obscure landscape of pricing intermediaries.”
The FTC is seeking information in four primary areas: the products and services related to surveillance pricing each company offers, their data collection methods, customer and sales data, and how these practices influence the prices consumers ultimately pay.