The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC for information on how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data tools for what is often referred to as “surveillance pricing,” or dynamic pricing, which allows them to present different prices to consumers based on various factors such as location, demographics, credit history, and online behavior.
The firms under scrutiny provide transaction, sales, and pricing services to some of the largest corporations in the United States and around the world. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing analytics and optimization for retail giants such as Home Depot. Pros, known for its AI-driven pricing solutions, serves notable clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate this “opaque market” that profiles consumers and determines specific prices for goods and services based on that profiling.
FTC Chair Lina Khan emphasized the concern, stating that companies collecting personal data could risk infringing on privacy. She noted that there is a possibility that this extensive collection of personal information might be used to impose higher prices. The inquiry seeks to clarify whether businesses are engaging in surveillance pricing practices, thereby illuminating the complex network of pricing intermediaries.
The FTC has identified four critical areas of focus: the types of surveillance pricing solutions each firm supplies, their data collection methods, customer and sales data, and the impact of these surveillance practices on the final prices customers pay.