The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The investigation aims to understand how these pricing tactics affect privacy, competition, and consumer protection.
Companies have been employing what is known as “surveillance pricing,” or “dynamic pricing,” utilizing data tools, including AI, to display different prices for the same products based on consumer attributes or behaviors. Factors such as geographical location, demographics, credit history, and shopping habits can influence these personalized prices.
Many firms contacted in this inquiry provide transaction, sales, and pricing services to major corporations throughout the U.S. and abroad. Task Software is noted for managing transactions for large hospitality businesses like McDonald’s and Starbucks, while Revionics offers price optimization software and pricing analytics for retail giants such as Home Depot. Pros, which claims to deliver AI-driven pricing solutions, has Nestlé, HP, and United Airlines among its clientele, and also partners with Microsoft for technology development.
The FTC is investigating the unclear practices within this market that classify consumers and assign targeted prices for goods and services.
“Companies collecting personal data from Americans could jeopardize individuals’ privacy. We must determine if these entities are misusing extensive consumer information to set higher prices,” stated FTC Chair Lina Khan. Additionally, the FTC plans to explore four primary areas: the types of surveillance pricing products and services provided by each company, methods of data collection, customer and sales information, and how these surveillance tactics impact customers’ final prices.