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.
Among those under scrutiny is McDonald’s, which is currently facing its first lawsuit linked to the E. coli outbreak associated with its Quarter Pounder.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to gather information on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools in a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on consumer characteristics and behavior such as location, demographics, credit history, and online shopping activity.
Many of the firms contacted by the FTC are involved in transaction, sales, and pricing services for some of the largest businesses in the United States and worldwide. Task Software manages transactions for major hospitality brands including McDonald’s and Starbucks. Revionics provides retail pricing optimization and analytics to global chains, including Home Depot. Pros specializes in AI-powered pricing solutions, serving clients such as Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to investigate this “opaque market,” which includes categorizing consumers and assigning targeted prices for products 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 seeking information in four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the impact of these practices on consumer pricing.