The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry affects eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued requests for information to assess how these pricing practices impact privacy, competition, and consumer protection.
These companies implement a method referred to as “surveillance pricing” or “dynamic pricing,” which allows for different prices to be shown to consumers for identical products based on individual characteristics or behaviors. Factors can include location, demographics, credit history, and online shopping habits.
Many of the firms approached by the FTC are significant players in transaction, sales, and pricing services used by top companies both domestically and internationally. Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to global retailers, including Home Depot. Pros markets itself as an AI-driven pricing solutions provider, serving clients such as Nestlé, HP, and United Airlines, and is also partnered with Microsoft for technology development.
The FTC aims to uncover practices in what it describes as an “opaque market” that profiles shoppers and assigns targeted prices for products and services.
“Companies that collect personal data from Americans can jeopardize their privacy. There is a potential for these firms to exploit extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether their data is being used for surveillance pricing, and this investigation will illuminate the obscure realm of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing solutions offered by each company, their data collection methods, sales and customer information, and the effect of these surveillance practices on the prices consumers pay.