The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued requests for information to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to explore the implications of these pricing practices on privacy, competition, and consumer protection.
Companies utilize data tools, often referred to as “surveillance pricing” or “dynamic pricing,” to present different prices to consumers based on individual characteristics or behaviors. Factors such as location, demographics, credit history, and online shopping history can influence the prices displayed.
Many of the companies involved provide transaction, sales, and pricing services to some of the largest businesses in the United States and around the world. For instance, Task Software specializes in transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization and analytics tools to global retailers including Home Depot. Additionally, Pros, which markets itself as a provider of AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” which involves categorizing consumers and determining targeted prices for various goods and services.
FTC Chair Lina Khan commented, “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 is particularly interested in four main areas: the types of surveillance pricing products and services provided by each company; their methods for data collection; relevant customer and sales information; and the impact of these surveillance practices on the prices customers ultimately pay.