The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies to examine their use of customer data, algorithms, and artificial intelligence in shaping personalized pricing strategies.
On Tuesday, the agency issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is seeking insights into how these practices affect privacy, competition, and consumer protection.
These companies utilize data tools, including AI, in a method referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present differing prices for the same products based on consumer characteristics and behaviors. Factors influencing these prices can include location, demographics, credit history, and online shopping habits.
Many firms that received inquiries from the FTC offer transaction and pricing services to major corporations both in the United States and around the world. Task, for example, manages transactions for notable hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization software for leading global retailers, including Home Depot. Pros positions itself as a provider of AI-driven pricing solutions and serves clients like Nestlé, HP, and United Airlines, while also partnering with Microsoft on technology development.
The FTC aims to clarify the complexities of the “opaque market” that profiles consumers and applies targeted pricing for various goods 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 agency is focusing on four main areas: the types of surveillance pricing products and services each company provides, their data collection methods, customer and sales information, and the effect of these practices on the pricing that consumers ultimately pay.