FTC Probes Top Companies Over Controversial Pricing Strategies

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The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in individualized pricing strategies.

The FTC issued requests for information to eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—aiming to assess how these practices affect privacy, competition, and consumer protection.

These companies utilize data tools, particularly AI, to implement what is commonly referred to as “surveillance pricing” or “dynamic pricing.” This strategy allows businesses to offer different prices for the same products based on various consumer characteristics, including location, demographics, credit history, and online behavior.

Many of the firms targeted by the FTC play critical roles in providing transaction, sales, and pricing services to leading businesses in the U.S. and internationally. For instance, Task serves as the transaction management partner for notable hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization and pricing analytics software for several global retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and is also a technology development partner for Microsoft.

Through this inquiry, the FTC seeks to unravel the complexities of what it calls the “opaque market,” which categorizes consumers and applies targeted pricing for various goods and services.

FTC Chair Lina Khan emphasized the risks associated with the misuse 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 agency is specifically looking for data in four crucial areas: the nature of surveillance pricing products and services each company provides; data collection methods; customer and sales data; and the effect of these surveillance practices on customer pricing.

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