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 FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting information about the implications of these pricing practices on privacy, competition, and consumer protection.
Companies are utilizing data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices to consumers for identical products based on individual characteristics or behaviors. Factors influencing these prices can include location, demographics, credit history, and online shopping habits.
Many of the firms under investigation offer transaction, sales, and pricing services to some of the largest corporations both in the U.S. and worldwide. Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and pricing analytics for global retailers, including Home Depot. Pros, marketed as a provider of AI-driven pricing solutions, serves high-profile clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” that monitors consumer behavior and sets targeted prices on goods and services. FTC Chair Lina Khan stated, “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 specifically requesting information in four primary areas: the types of surveillance pricing products and services offered by each company, the methods of data collection employed, customer and sales data, and the impact of these surveillance practices on the prices consumers ultimately pay.