The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC seeking insight into the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies are employing a method known as “surveillance pricing,” also referred to as “dynamic pricing,” which involves presenting different prices to consumers for the same products based on various factors such as location, demographics, credit history, and browsing or shopping behaviors.
Many of the firms under investigation provide transaction, sales, and pricing services to significant players in the U.S. and international markets. Task Software manages transactions for prominent hospitality brands, including McDonald’s and Starbucks, while Revionics offers retail price optimization solutions and analytics for major global retailers like Home Depot. Pros, a software developer known for its AI-powered pricing solutions, counts clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the mechanisms behind this “opaque market” that identifies consumers and establishes targeted pricing for products and services. FTC Chair Lina Khan highlighted the privacy risks associated with companies collecting vast amounts of personal data, raising concerns that this information might be used to impose higher prices. She emphasized that consumers deserve transparency regarding how businesses utilize detailed consumer data for surveillance pricing, stating that the inquiry intends to illuminate the obscure framework of pricing intermediaries.
The FTC’s investigation focuses on four main aspects: the types of surveillance pricing solutions offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance practices on the prices consumers face.