Mastercard in AI pricing scandal

The Federal Trade Commission (FTC) is investigating eight companies over their use of ‘surveillance pricing.’ 

Surveillance pricing is a pricing strategy that gives individual consumers different prices for the same products or services, based on a combination of different factors, like what device they’re shopping on, where they are, demographics, and credit history. 

As part of the investigation, the FTC is asking these companies to provide information on the products and services they offer, who their customers are, how they collect consumer data, how their customers use their product or service, and what effect this all has on their pricing. 

The eight companies being investigated include Mastercard, JPMorgan Chase, Accenture, and consulting giant McKinsey & Co. 

The software company, Task—which counts Mcdonald's and Starbucks as customers—Revionics—which works with Home Depot—Bloomreach—which works with Total Wine and Puma—and Pros—which is Microsoft’s internet service vendor of the year—are also being investigated. 

According to the FTC: 

“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.”

By conducting this investigation, they’re trying to “lift the hood on opaque practices that have the potential to profoundly reshape how consumers purchase goods and services” and don't cause harm to “certain communities, like women and rural consumers.”

Although companies like JetBlue change prices based on variables like peak or off-peak times, and Amazon has algorithms that tell them when to raise or lower prices, surveillance pricing is a different practice. It leverages personal consumer data to determine how much a customer is willing to pay for something, rather than using external variables, like the weather, for example.