The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received orders from the FTC seeking information on how these practices affect privacy, competition, and consumer protection.
These companies employ a method known as “surveillance pricing,” or “dynamic pricing,” where different prices are offered to consumers for the same products based on various factors such as location, demographics, credit history, and shopping behavior.
Several of the contacted companies are significant players in transaction, sales, and pricing services in the U.S. and internationally. Task Software is known for its transaction management services for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global retailers like Home Depot. Pros, identified as a provider of AI-powered pricing solutions, has clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to investigate this “opaque market” that segments consumers and determines targeted pricing strategies for goods and services. FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating, “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 focusing on four main areas: the types of surveillance pricing products and services offered by each company; data collection methods; customer and sales information; and the influence of these surveillance practices on pricing for consumers.