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 involves eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued requests for information aimed at understanding how these pricing practices affect consumer privacy, competition, and protection.
These companies use data-driven tools, referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on consumers’ characteristics and behavior. Factors influencing these prices may include a consumer’s location, demographic details, credit history, and online shopping behavior.
Many of the firms involved provide transaction, sales, and pricing services to major businesses both in the United States and internationally. For example, Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to several global retailers, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC aims to uncover the intricacies of what it describes as an “opaque market” where customers are categorized and targeted with specific prices for products and services.
“Companies that collect Americans’ personal data can jeopardize people’s privacy. Now these firms could be using this extensive personal information to impose higher costs on consumers,” stated FTC Chair Lina Khan. “Americans deserve transparency regarding whether businesses are using detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this obscure pricing landscape.”
The FTC’s inquiry focuses on four main areas: the specific surveillance pricing products and services offered by each company, methods of data collection, customer and sales data, and the impact of these surveillance practices on the prices consumers are charged.