The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to set personalized pricing.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued orders by the FTC on Tuesday. The agency is seeking insights into how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data tools, particularly AI, to implement a strategy known as “surveillance pricing,” or “dynamic pricing.” This practice allows them to display varying prices for the same products based on individual consumer characteristics, such as location, demographics, credit history, and online shopping behavior.
Many firms under investigation supply transaction, sales, and pricing services to major corporations both in the U.S. and internationally. Task Software, for example, manages transactions for well-known hospitality brands like McDonald’s and Starbucks. Revionics delivers retail price optimization software to various global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and is also a technology partner of Microsoft.
The FTC aims to uncover the complexities of this “opaque market,” which categorizes consumers to set specific prices for various products and services.
FTC Chair Lina Khan emphasized the potential risks associated with the collection of 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 services offered by each company, methods of data collection, customer and sales data, and the influence of these practices on the final prices charged to consumers.