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.
On Tuesday, the regulatory agency issued requests for information to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiry focuses on the effects of these pricing practices on privacy, competition, and consumer protection.
These companies employ data-driven techniques, referred to as “surveillance pricing” or “dynamic pricing,” which enable them to present varying product prices to customers based on specific traits or behaviors. Relevant factors include location, demographics, credit history, and past browsing or shopping actions.
The majority of the firms contacted by the FTC offer transaction, sales, and pricing services to some of the largest companies in the United States and worldwide. Task Software manages transactions for major hospitality brands such as McDonald’s and Starbucks. Revionics supplies retail price optimization tools and pricing analytics to global retailers like Home Depot, while Pros, marketed as an AI-based pricing solutions provider, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft for technology development.
The FTC aims to clarify the unclear market practice of categorizing consumers and applying targeted pricing strategies.
“Companies that collect Americans’ personal data risk jeopardizing people’s privacy. They might be taking advantage of the extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are using detailed consumer information for surveillance pricing, and this inquiry will illuminate the obscure world of pricing intermediaries.”
The FTC’s investigation seeks details in four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on the pricing customers pay.