The Federal Trade Commission (FTC) is conducting an investigation into how companies use artificial intelligence (AI) to determine pricing based on consumer behaviour. FTC has issued orders to eight major companies seeking information on their AI-powered “surveillance pricing” systems and practices.
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FTC Investigation on Surveillance Pricing
The FTC announced on July 23, 2024 that it had issued orders to eight companies that offer AI surveillance pricing products and services. The companies include Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co. The agency issued orders using the FTC’s 6(b) authority to conduct research without a specific law enforcement purpose.
Information Requested by FTC
The FTC is seeking information on the types of surveillance pricing products and services offered. This also includes the data used to power these systems, which customers the products are offered to, and the potential impacts on consumer prices and privacy. Companies will provide details on algorithms, machine learning applications and historical customer data analyzed to target prices for individuals.
Potential Impact
Regulators are concerned about the possible exploitation of consumer data without consent to charge higher prices. The orders aim to evaluate the effect of these systems particularly on vulnerable sections like women, rural users, and whether it results in harm or unfair disadvantages.
FTC Concerns about Surveillance Pricing Impacts
The FTC is concerned that pricing could exploit some consumers given personal attributes like gender, income level or geographic location. Chair Lina M. Khan noted that the practice “could be” used to charge people higher prices based on detailed personal data. The investigation aims to understand if such impacts are actually occurring.
Rising Use of AI for Personalized Pricing
Experts note that AI personalized and dynamic pricing is an emerging trend. Companies want to maximize revenue by charging individual consumers different prices. The FTC wants proper knowledge about the current uses of the technology and its potential future growth and harm reduction.
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