The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices of using customer data, algorithms, and artificial intelligence to customize pricing for individuals.
The investigation involves eight firms spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have been ordered to provide information concerning how their pricing strategies could affect privacy, competition, and consumer protection.
These companies utilize advanced data tools, referred to as “surveillance pricing” or “dynamic pricing,” which enable them to present different prices for identical products based on individual consumer characteristics or behaviors, such as location, demographics, credit history, and online shopping history.
Many of the firms under investigation play critical roles in providing transaction, sales, and pricing services to major corporations across the United States and globally. Task Software, for example, is the transaction management platform for well-known hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software, serving global chains including Home Depot. Pros, which promotes its AI-driven pricing solutions, counts notable clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to uncover the intricacies of what it describes as an “opaque market” that categorizes consumers in order to set targeted pricing for various products and services.
FTC Chair Lina Khan commented on the investigation, 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 is specifically seeking information on four main areas: the types of surveillance pricing products and services offered by each company, their methods of data collection, customer and sales data, and the influence of these surveillance practices on the prices that customers ultimately pay.