The Federal Trade Commission (FTC) has taken a significant step in its investigation into surveillance pricing practices by ordering information from eight companies. These firms allegedly utilize personal data to set prices based on individual characteristics, prompting concerns about privacy and consumer protection.
In an official announcement on Tuesday, the FTC expressed its intention to gain a deeper understanding of the “opaque market” of surveillance pricing. This practice involves using consumer data, including credit information, location, and browsing history, to charge different customers varying prices for the same products. Third-party intermediaries claim to employ advanced algorithms, artificial intelligence, and other technologies to implement this pricing strategy.
FTC Chair Lina M. Khan emphasized the potential risks to privacy posed by companies that harvest personal data. She stated that the inquiry aims to shed light on the shadowy ecosystem of pricing middlemen. The FTC has sent orders to Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co, seeking information on the types of surveillance pricing they have developed or licensed, data collection methods, and potential impacts on consumers.
Revionics, one of the companies targeted by the FTC, denied developing software that recommends pricing targeted at specific individuals or using individual consumer data in any manner. The software company clarified that its AI price optimization software considers market-level factors, such as historical sales data, to recommend optimal prices. Revionics reiterated that it does not engage in operations related to consumer surveillance.
Mastercard, another company included in the FTC’s inquiry, did not provide a comment but confirmed its cooperation with the process. The remaining companies have not released additional statements at this time.
The FTC’s study seeks to unravel the workings of surveillance pricing and investigate its potential implications for privacy and consumer protection. By delving into the practices of these companies, the agency aims to bring transparency to this controversial pricing strategy.