FTC Probes Major Firms Over ‘Surveillance Pricing’ Strategies

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The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to adjust pricing for individual consumers.

This development comes as McDonald’s faces its first lawsuit related to the E. coli outbreak linked to its Quarter Pounder hamburgers.

The FTC has issued orders to eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting information about how such pricing strategies affect consumer privacy, competition, and consumer protection.

These companies utilize data-driven tools, including AI, to implement what is known as “surveillance pricing” or “dynamic pricing.” This approach allows companies to offer varying prices for the same products, depending on factors such as a consumer’s location, demographics, credit history, and online shopping behavior.

The FCC’s investigation focuses on these companies, many of which play significant roles in providing transaction, sales, and pricing services to major businesses both in the United States and internationally. For instance, Task Software is involved in managing transactions for prominent hospitality brands, including McDonald’s and Starbucks. Revionics supplies retail price optimization software to various global retailers, including Home Depot, while Pros, which markets AI-enabled pricing solutions, counts clients like Nestlé, HP, and United Airlines, and also partners with Microsoft for technology development.

The FTC aims to expose the complexities of this “opaque market,” which categorizes consumers and assigns targeted prices for goods and services.

FTC Chair Lina Khan commented, “Companies that collect personal data from Americans could be jeopardizing their privacy. Now, these firms might be taking advantage of this extensive personal information to impose higher prices. Americans have the right to understand if their detailed consumer data is being used for surveillance pricing, and this inquiry will clarify the murky network of pricing intermediaries.”

The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales information, and how these surveillance practices affect the prices consumers ultimately pay.

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