The Federal Trade Commission (FTC) has initiated an investigation into several large companies concerning their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The FTC has ordered eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, to provide information regarding the influence of these pricing strategies on consumer privacy, competition, and consumer protection.
Companies are employing data tools, such as artificial intelligence, in a practice commonly referred to as “surveillance pricing” or “dynamic pricing.” This method enables businesses to display varying prices for the same products based on factors such as location, demographics, credit history, and online behavior.
The firms under investigation supply transaction, sales, and pricing services to some of the largest companies in the United States and worldwide. Task Software is involved in transaction management for notable hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for major chains, including Home Depot, while Pros claims to offer AI-driven pricing solutions and lists Nestlé, HP, and United Airlines among its clientele. Pros is also a technology partner with Microsoft.
The FTC aims to explore the complexities of an “opaque market” that categorizes consumers and adjusts prices for various products and services accordingly.
“Businesses that collect and utilize Americans’ personal data pose a risk to privacy. They may be exploiting this extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans should know if businesses are leveraging detailed customer data for surveillance pricing, and this inquiry will illuminate the hidden network of pricing intermediaries.”
The FTC is seeking information on four main aspects: the types of surveillance pricing products and services each company provides, the methods of data collection, customer and sales data, and the impact of these surveillance practices on consumer pricing.