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.
The agency has issued requests for information to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These inquiries are focused on how such pricing practices affect privacy, competition, and consumer protection.
Companies utilize various data tools, including AI, to implement “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows businesses to present different prices for identical products based on consumer traits or behaviors, which may encompass factors like location, demographics, credit history, and online activity.
Many of the companies targeted in the FTC’s investigation supply transaction, sales, and pricing solutions to major corporations both domestically and internationally. Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for global retailers such as Home Depot. Pros focuses on AI-driven pricing solutions and serves clients like Nestlé, HP, and United Airlines, while also collaborating with Microsoft.
The FTC aims to investigate the “opaque market” that enables businesses to categorize consumers and set targeted pricing for products and services.
FTC Chair Lina Khan emphasized the risks associated with companies collecting personal data, 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 seeking information on four main aspects: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and the impact of these surveillance practices on the pricing consumers ultimately pay.