The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The inquiry, announced on Tuesday, involves eight firms including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC seeks to gather information on how these pricing strategies impact privacy, competition, and consumer protection.
Companies utilize data-driven methods, including AI, to implement what is known as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to display varying prices for identical products based on factors such as consumer behaviors, demographics, location, and browsing history.
Many firms under scrutiny provide transaction, sales, and pricing services to major U.S. and global corporations. For instance, Task manages transactions for prominent hospitality chains like McDonald’s and Starbucks, while Revionics supplies pricing optimization software to retailers like Home Depot. Pros, which promotes its AI-based pricing solutions, serves clients including Nestlé, HP, and United Airlines, and is also a technological partner for Microsoft.
The FTC aims to clarify the workings of this “opaque market” that not only categorizes consumers but also sets specific prices for different people based on extensive data analysis.
FTC Chair Lina Khan emphasized the risks, 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 looking for 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 pricing practices affect the prices consumers ultimately pay.