The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The regulator issued orders on Tuesday to eight firms including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The aim is to explore the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies utilize data tools to implement a practice referred to as “surveillance pricing,” also known as “dynamic pricing,” which allows them to present varying prices for the same products based on consumer attributes such as location, demographics, credit history, and online behavior.
Many of the firms targeted by the FTC are key providers of transaction, sales, and pricing services for some of the largest companies in the United States and around the world. Task Software is a transaction management company associated with notable hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for major global chains, including Home Depot, while Pros, which offers AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC is aiming to clarify the complex market where consumer categorization leads to targeted pricing practices. 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 commission is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and how these surveillance practices affect the prices consumers ultimately pay.