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 strategies.
Eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency seeks to understand the implications of these pricing practices on privacy, competition, and consumer protection.
These companies employ data-driven methods, referred to as “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices for the same products based on individual consumer characteristics or behaviors. Factors can include location, demographics, credit history, and shopping patterns.
Many of the firms approached by the FTC provide critical transaction, sales, and pricing services to some of the largest corporations both in the U.S. and worldwide. Task Software is noted for managing transactions for several major hospitality brands such as McDonald’s and Starbucks. Revionics supplies retail price optimization and analytics software to major retailers like Home Depot. Meanwhile, Pros offers AI-driven solutions for pricing and counts companies such as Nestlé, HP, and United Airlines among its clientele. Additionally, it partners with Microsoft for technology development.
The FTC aims to investigate this complex market that involves categorizing shoppers and implementing targeted pricing models. FTC Chair Lina Khan emphasized the risks associated with companies using personal data, stating, “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.” She highlighted the need for transparency, asserting that Americans should be informed about how their data is used to manipulate pricing.
The commission is particularly interested in four main areas: the kinds of surveillance pricing products and services provided, data collection methods, customer and sales data, and the influence of these practices on consumer pricing.