US FTC looking into targeted pricing based on personal data (updated)

PROS Holdings

23/07/2024 17:49

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    By Jody Godoy
       July 23 (Reuters) - The U.S. Federal Trade Commission
has launched a study of products that could allow companies to
set different prices for consumers based on their locations,
past purchases, and other personal data.
    The agency said on Tuesday it had ordered Mastercard  MA.N ,
JPMorgan Chase  JPM.N , and six other companies to provide
information about targeted pricing products, the data they use,
who uses them and the effect on prices.
    The FTC is seeking the same information from IT services
provider Accenture  ACN.N , consulting firm McKinsey & Co., and
software providers Pros Holdings Inc  PRO.N , Revionics,
Bloomreach, and Task Software. 
    All of the companies offer products that use consumer data
and artificial intelligence or other technology to target prices
for individual consumers, the agency said. None of the companies
are accused of wrongdoing.
    FTC Chair Lina Khan said the study will illuminate a
"shadowy ecosystem of pricing middlemen."
    "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," Khan said in a statement.
    A spokesperson for Revionics said the company does not use
individual consumer data or develop software to target prices to
individuals, and that its software considers market-level
factors when recommending prices to retailers. 
    "We are confident that the FTC will affirm the benefits of
Revionics' AI price optimization software pending its research
into this matter," the spokesperson said.
        A spokesperson for Mastercard said it was reviewing the
order and would cooperate with the FTC. Other companies did not
immediately comment on the orders.

    SPRAWLING INFRASTRUCTURE
    Online advertising has long used data such as browsing
history and device location to determine what ads consumers see.
    The agency is concerned similar technology can now be used
to set disparate prices, which it calls "surveillance pricing,"
or potentially collude with competitors, FTC officials said.
    The FTC voted 5-0 to authorize the study, though the
agency's two Republican commissioners disagreed with the term
"surveillance pricing," calling it "personalized pricing."
    The products the FTC is concerned about go by various names,
including data-driven pricing, price optimization consulting,
and location-based predictive targeting.
        R.J. Cross, a consumer advocate at the U.S. Public
Interest Research Group (PIRG), said they raise concerns about
fairness and privacy.
  
        PIRG and other groups last year called on Mastercard to
limit its use of cardholder data to providing card services.
  
    The FTC is already considering rules aimed at protecting
consumer privacy and limiting what data businesses can collect
without consent.
    The U.S. Consumer Financial Protection Bureau is also
weighing potential rules to expand privacy protections for
consumers.

 (Reporting by Jody Godoy in New York; Editing by Stephen Coates
and Aurora Ellis)
 ((Jody.Godoy@thomsonreuters.com;))