The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is examining the effects of these pricing practices on privacy, competition, and consumer rights.
These companies utilize data-driven tools to implement what is termed “surveillance pricing” or “dynamic pricing.” This involves presenting different prices for the same products to different consumers based on specific characteristics or behaviors, such as location, demographics, credit history, and browsing or purchasing habits.
Many of the firms under investigation offer transaction, sales, and pricing services to some of the largest companies in the United States and worldwide. For example, Task Software is behind transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization technologies and analytics for various global retailers, including Home Depot. Pros, recognized for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market,” which involves classifying consumers and setting targeted prices for various products and services.
“Companies that utilize Americans’ personal data may jeopardize privacy. There’s a possibility that these firms are leveraging extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers deserve transparency regarding whether their detailed data is being used in surveillance pricing, and the FTC’s inquiry will illuminate the murky operations of this pricing ecosystem.”
The FTC is seeking insights in four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the influence of these practices on customer pricing outcomes.