The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies have been issued information requests by the FTC, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory agency is seeking to understand the implications of these pricing practices on privacy, competition, and consumer protection.
These companies utilize data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices for the same products based on factors like consumer behavior, demographics, and location.
Many of the companies involved provide transaction, sales, and pricing services for major corporations in the U.S. and internationally. Task Software offers transaction management solutions to notable hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization software and is contracted by global chains like Home Depot. Pros, known for its AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and collaborates technologically with Microsoft.
The FTC aims to investigate what it describes as an “opaque market” that categorizes consumers and sets specific prices for products and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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’s investigation focuses on four main areas: the types of surveillance pricing products and services offered by these companies, their data collection methods, customer and sales information, and how these surveillance practices affect the prices consumers ultimately pay.