The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation targets eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide information about how their pricing practices affect privacy, competition, and consumer protection.
Through various data tools, including artificial intelligence, these companies engage in what is known as “surveillance pricing” or “dynamic pricing,” presenting different prices to consumers for identical products based on specific characteristics or behaviors. Factors that may influence these prices include a consumer’s location, demographics, credit history, and online shopping behavior.
Many of the firms under scrutiny offer transaction, sales, and pricing services to some of the largest corporations in the U.S. and globally. For instance, Task Software handles transaction management for major hospitality chains like McDonald’s and Starbucks, while Revionics supplies retail pricing optimization tools to companies such as Home Depot. Pros, which promotes itself as an AI-driven pricing solutions provider, serves clients including Nestlé, HP, and United Airlines and collaborates with Microsoft as a technology partner.
The FTC aims to investigate this “opaque market” that categorizes consumers and establishes targeted pricing for goods and services.
“Companies that utilize Americans’ personal data can jeopardize privacy. They may be leveraging this extensive data to impose higher prices on consumers,” stated FTC Chair Lina Khan. “Americans deserve transparency regarding whether businesses are employing detailed consumer data for surveillance pricing, and the FTC’s investigation will uncover this concealed pricing landscape.”
The FTC is focusing on four main areas for information: the types of surveillance pricing offerings from each company, the data collection methods they utilize, customer and sales data, and the effect of these surveillance practices on the prices customers ultimately pay.