The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence in relation to customized pricing strategies.
This inquiry involves eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these companies requesting information about how these pricing practices could affect privacy, competition, and consumer protection.
These companies utilize what is known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices to consumers based on factors such as location, demographics, credit history, and previous shopping behaviors.
Many of the firms engaged by the FTC provide transaction, sales, and pricing services to some of the largest businesses within the United States and globally. For instance, Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization tools to chains like Home Depot, while Pros, which markets AI-driven pricing solutions, works with clients such as Nestlé and HP, and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market” that categorizes consumers and determines targeted pricing for various products and services.
“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,” stated FTC Chair Lina Khan. “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 seeking information in four main areas: the types of surveillance pricing services offered by each company, data collection methods, customer and sales data, and the impact of these practices on the pricing consumers ultimately pay.