The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The inquiry comes as McDonald’s confronts its first lawsuit connected to the E. coli outbreak associated with its Quarter Pounder. Eight companies, which include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC for information about how these pricing strategies affect privacy, competition, and consumer protection.
These businesses employ what is known as “surveillance pricing” or “dynamic pricing” by using data tools like AI to offer different prices to consumers for identical products based on certain characteristics or behaviors. Factors such as location, demographics, credit history, and browsing or shopping habits can influence these tailored prices.
Many of the firms contacted by the FTC provide transaction, sales, and pricing services to significant U.S. and global corporations. Task Software manages transactions for major hospitality companies, including McDonald’s and Starbucks. Revionics offers retail price optimization tools and pricing analytics to various international retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves well-known clients like Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC is keen to uncover the details of this “opaque market” that segments shoppers and establishes specific prices for 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 FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance practices on the prices customers ultimately pay.