The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation targets eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms were served with requests for information that focuses on the implications of their pricing practices for privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as AI, to implement what is referred to as “surveillance pricing” or “dynamic pricing.” This approach allows different prices to be displayed to different consumers based on various factors such as location, demographics, credit history, and online behavior.
Many of the firms under scrutiny offer transaction and pricing services to some of the largest companies in the U.S. and around the world. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and provides analytics to global retailers like Home Depot. Pros, which offers AI-driven pricing solutions, serves notable clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate what it describes as an “opaque market” where consumers are categorized and face targeted pricing for different products and services.
“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,” stated FTC Chair Lina Khan. “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 particularly interested in four main areas: 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 pricing practices on the prices ultimately paid by consumers.