The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to set personalized prices.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information about the effects of these pricing strategies on privacy, competition, and consumer protection.
These companies utilize data tools to engage in a practice known as “surveillance pricing,” also referred to as “dynamic pricing.” This method allows them to offer different prices for the same products based on individual consumer characteristics such as location, demographics, credit history, and previous shopping behavior.
Many of the firms approached by the FTC are key players in providing transaction, sales, and pricing services to large corporations both in the U.S. and internationally. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks, while Revionics offers retail price optimization software to global retailers like Home Depot. Pros, which specializes in AI-driven pricing solutions, serves big names like Nestlé, HP, and United Airlines and is a technology partner of Microsoft.
The FTC aims to clarify the complexities of this “opaque market” that profiles shoppers and applies targeted pricing strategies.
“Businesses that collect Americans’ personal data risk compromising their privacy. They may be taking advantage of this extensive information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to understand if companies are leveraging detailed data to implement surveillance pricing, and this inquiry will illuminate the hidden dynamics of pricing intermediaries.”
The FTC is seeking information in four major areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance practices on the final prices consumers pay.