The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the FTC for information concerning how these pricing practices affect privacy, competition, and consumer protection.
These companies are employing methods referred to as “surveillance pricing” or “dynamic pricing,” which involve presenting different prices to consumers for identical products based on various factors such as location, demographics, credit history, and shopping patterns.
Many of the firms involved provide transaction, sales, and pricing solutions to some of the largest corporations in the United States and around the world. Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for various global retailers, including Home Depot. Pros, which focuses on AI-powered pricing solutions, counts Nestlé, HP, and United Airlines among its clients, and also collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market” that categorizes consumers and establishes targeted pricing for goods and services.
“Companies that collect personal data from Americans could be jeopardizing their privacy. It’s possible that businesses are taking advantage of this extensive personal information to charge higher prices,” said FTC Chair Lina Khan in a statement. “Americans have the right to know if their detailed consumer data is being used for surveillance pricing, and this FTC inquiry will illuminate this obscure realm of pricing intermediaries.”
The FTC’s investigation will focus on four primary areas: the types of surveillance pricing products and services offered by each company, their methods of data collection, customer and sales information, and the impact of these surveillance practices on consumer pricing.