FTC Probes Corporate Use of AI to Adjust Pricing Based on Customer Actions

On Tuesday, the Federal Trade Commission revealed it has mandated that eight firms involved in offering AI-enhanced “surveillance service pricing” disclose information regarding how their services might affect privacy, market competition, and the protection of consumers.

Through this probe, the agency aims to deepen its understanding of the applications of artificial intelligence and similar innovations in altering prices based on the consumer’s behavior, geographic location, and various personal details. Such practices enable organizations to apply variable pricing strategies for different consumers, according to the FTC.

The entities under scrutiny include Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co. These companies are known for leveraging AI to customize pricing for varied customer segments, as per the FTC’s statement.

The request for information encompasses a range of topics including the specifics of the surveillance pricing services developed by these corporations, the possibility of these solutions being licensed to external parties, their current applications, and the overall impact on pricing for consumers.

FTC Chair Lina M. Khan expressed concerns in a press release, stating, “Companies gathering widespread personal data on Americans pose a risk to privacy. Now, it appears they might be using this extensive personal data to subject individuals to higher pricing. The public has a right to know if businesses are employing detailed consumer data to institute surveillance pricing mechanisms. This inquiry by the FTC is set to illuminate the obscure operations of these pricing intermediaries.”

Historically, advertisers have utilized consumer location data and previous buying behaviors to tailor online ad experiences. However, the FTC is now alarmed that such techniques have evolved to facilitate surveillance pricing schemes.