The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their usage of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests for information from the FTC. The agency seeks to understand the implications of these pricing methods on privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on individual consumer characteristics or behaviors. Factors influencing this pricing can include location, demographics, credit history, and shopping patterns.
Many firms contacted by the FTC are key players in providing transaction, sales, and pricing services to some of the largest companies in the United States and worldwide. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization solutions to global chains like Home Depot. Pros, which claims to provide AI-enhanced pricing solutions, has notable clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to unravel the complexities of this “opaque market,” which categorizes consumers and establishes targeted pricing models for goods and services.
FTC Chair Lina Khan emphasized the potential 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 agency is seeking information in four critical areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales data, and the effects of these practices on the pricing experienced by consumers.