FTC probes if companies boost costs for consumers based on their data

The Federal Trade Commission (FTC) is investigating how artificial intelligence is helping companies implement individualized prices for products using data like consumers’ finances and shopping habits, a practice known as surveillance pricing.

The FTC issued civil subpoenas from eight companies, including Mastercard, JPMorgan Chase, McKinsey, and Accenture, among others, whose clients include brands like Starbucks, McDonald’s, Home Depot and Kirkland’s. These financial companies and consultants advertise targeted pricing products to their clients.

FTC Chair Lina Khan said the inquiry “will shed light on this shadowy ecosystem of pricing middlemen.”

Consumers already know about dynamic pricing, which charges people based on demand. Airlines and cab-hailing services often use this model to increase their profits. Surveillance pricing is similar to that.

The FTC is investigating whether any privacy or competition risks haven’t been disclosed to the agency. It seeks information about the pricing services these companies offer, the data they collect, who uses it, the targeted consumer types, and the impact on prices.

The FTC is also concerned that customers aren’t aware of how their personal information and online habits affect their purchasing power.