FTC launches probe into ‘surveillance pricing’ that it says hyperlinks value to buyer information

Lina Khan, chair of the Federal Commerce Fee, speaks throughout the 2024 CNBC CEO Council Summit in Washington, D.C., on June 4, 2024.

Shannon Finney | CNBC

The Federal Commerce Fee is launching an investigation into so-called surveillance pricing, looking for extra details about how synthetic intelligence is used to vary pricing quickly primarily based on information about buyer conduct and traits.

The FTC says the observe permits firms to cost totally different clients, totally different costs.

The company is serving eight firms with a compulsory request for data — all firms it says promote their AI and different tech instruments together with a trove of buyer data to focus on costs to particular person clients.

The record contains Mastercard, JPMorgan Chase, Accenture and consulting large McKinsey. It additionally contains software program agency Job, which counts McDonald’s and Starbucks as shoppers; Revionics, which works with Residence Depot, Tractor Provide and grocery chain Hannaford; Bloomreach, which providers FreshDirect, Whole Wine and Puma; and Professionals, which was named Microsoft’s web service vendor of the 12 months this 12 months.

“Corporations that harvest Individuals’ private information can put individuals’s privateness in danger,” FTC Chair Lina Khan stated in a information launch. “Now corporations might be exploiting this huge trove of non-public data to cost individuals larger costs.”

Kahn describes surveillance pricing as a “shadowy ecosystem of pricing middlemen.”

The FTC is demanding details about the forms of services provided; how the businesses acquire shopper information; who their clients are; how the shoppers are utilizing this services or products; and what impact it has on shopper pricing.

The company is enterprise the motion underneath its 6(b) authority, which authorizes it to gather data for research with out a particular legislation enforcement motion.

CNBC has reached out to the businesses included within the FTC’s requests.

Mastercard stated in an announcement, “We are going to cooperate with the FTC on this course of.”

Revionics stated in an announcement it doesn’t make software program that recommends pricing focused to particular people and “doesn’t, in any method, conduct operations associated to the surveillance of shoppers.”

“We’re assured that the FTC will affirm the advantages of Revionics’ AI value optimization software program pending its analysis into this matter,” it stated.

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