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.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how these practices affect privacy, competition, and consumer protection.
These companies employ a strategy known as “surveillance pricing,” or “dynamic pricing,” which allows them to display varied prices for the same items based on individual consumer traits or behaviors. Factors influencing these price variations may include a customer’s location, demographics, credit history, and online shopping patterns.
Many of the firms under scrutiny provide transaction, sales, and pricing services to major corporations both domestically and internationally. Task Software manages transactions for leading hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software utilized by renowned chains such as Home Depot. Pros markets itself as a provider of AI-driven pricing solutions and serves high-profile clients like Nestlé, HP, and United Airlines, while also partnering with Microsoft in technology development.
The FTC’s aim is to uncover the complexities of this “opaque market” that categorizes consumers and applies tailored pricing for various products and services.
FTC Chair Lina Khan stated, “Companies that collect and analyze Americans’ personal data pose risks to individual privacy. There are concerns that these firms might be using extensive personal information to impose higher prices on consumers. Americans deserve transparency about whether businesses are employing detailed consumer data for surveillance pricing, and this inquiry will bring clarity to the unclear world of pricing intermediaries.”
The FTC is focusing its investigation on four main areas: the specific surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these pricing practices on the final prices that customers pay.