FTC Probing “Surveillance Pricing”

The Federal Trade Commission is launching an inquiry into so-called “surveillance pricing,” seeking more information about how artificial intelligence can be used to change pricing rapidly based on data about customer behavior and characteristics, CNBC.com reports.

The FTC says the practice allows companies to charge different customers different prices.

“Firms that harvest Americans’ personal data can put people’s privacy at risk,” FTC Chair Lina Khan said in a news release. “Now firms could be exploiting this vast trove of personal information to charge people higher prices.”

The agency is serving eight companies with a mandatory request for information — all companies it says advertise their AI and other tech tools along with a trove of customer information to target prices to individual customers.

The companies being queried are:

• Software firm Task, which counts McDonald’s and Starbucks as clients;
• Revionics, which works with Home Depot, Tractor Supply and grocery chain Hannaford;
• Bloomreach, which services FreshDirect, Total Wine and Puma;
• Pros, which was named Microsoft’s internet service vendor of the year for 2024;
• Credit card issuer Mastercard;
• Financial services giant JPMorgan Chase;
• Consulting firms Accenture and McKinsey.

The agency’s undertaking the action under its 6(b) authority, which allows it to collect information for study without a specific law-enforcement action.

CNBC reached out to the companies included in the FTC’s request and had received the follow responses as of its posting:

• Mastercard said in a statement, “We will cooperate with the FTC in this process.”

• Revionics said in a statement it does not make software that recommends pricing targeted to specific individuals and “does not, in any way, conduct operations related to the surveillance of consumers.” “We are confident that the FTC will affirm the benefits of Revionics’ AI price optimization software pending its research into this matter,” it said.

• Bloomreach said via a spokesperson it “welcomes the opportunity to assist the FTC’s industry inquiry.” “We believe in fair competition and the protection and education of consumers, and are committed to that pursuit while providing the consumer with a better, more personalized experience,” the spokesperson said in a statement.

Click here for the full CNBC report.