(NewsNation) — The Federal Trade Commission has launched an investigation into how companies such as JPMorgan and Mastercard use “surveillance pricing” to sell the same products at different price points.
In a Tuesday announcement, the FTC said it was seeking to better understand surveillance pricing practices using consumer data — including credit information, location and browsing history — to charge different customers different prices for the same goods.
To do this, the agency noted, advanced algorithms, artificial intelligence and other technology have been deployed to collect personal information about consumers, which can then be used to individualize prices and impact your bills.
What is surveillance pricing?
Surveillance pricing is the the practice of linking pricing to individualized consumer data.
Companies using surveillance pricing might use algorithms and AI to set a price for their goods based on numerous factors including where you live, or your browsing and credit history.
The practice isn’t completely new, as reported by QUARTZ. In 2012, travel website Orbitz directed people using Macs to higher-priced hotels after realizing they typically had more purchasing power. They stopped the practice after The Wall Street Journal reported on it.
“Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices,” FTC Chair Lina Khan said Tuesday in a statement. “Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The FTC said it sent orders to Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co.
The agency says its “study” will aim to understand how surveillance pricing works and investigate potential impacts on privacy and consumer protection.
The orders requested information on the “types of surveillance pricing” that each company has produced, developed or licensed — as well as details on data collection methods, which customers were offered such products or services and other potential impacts, such as different prices paid, the FTC said.
In a statement sent to The Associated Press Tuesday, Revionics said that it “does not develop software that recommends pricing targeted to specific individuals,” or use individual consumer data “in any manner.”
The software company said its AI price optimization software considers several “market-level factors” to recommend optimal prices, such as historical sales data. Revionics added that its data is often sourced from retail partners — reiterating that it “does not, in any way, conduct operations related to the surveillance of consumers.”
Mastercard did not comment when reached by the AP on Tuesday afternoon, but confirmed that it received the FTC’s request and would cooperate in the process. The remaining companies did not immediately release additional statements.
The Associated Press contributed to this report.
