The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the FTC for information on how these pricing practices may impact privacy, competition, and consumer protection.
These companies utilize various data tools, including AI, to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to display different prices for the same products to different consumers, based on factors such as location, demographics, credit history, and browsing or shopping behavior.
Many of the companies involved provide transaction, sales, and pricing services to some of the largest firms in the U.S. and worldwide. Task Software is responsible for transaction management for several notable hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics services to various global retailers, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, counts major corporations like Nestlé, HP, and United Airlines among its customers and collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the workings of this “opaque market,” which segments consumers and sets targeted pricing for various products and services. FTC Chair Lina Khan stated, “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 is particularly interested in four areas: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the impact of these surveillance practices on the prices customers ultimately pay.