The Federal Trade Commission (FTC) has ordered eight companies to provide more details of their practices. These companies, which use AI to set prices based on consumer data, should now clarify how this may harm privacy, fair competition, and consumer protection.
The FTC will start examining how these companies collect and use consumer data, such as browsing history, location, and purchasing habits, to determine the price at which they are charged for products or services.
The unknown use of all the collected data raises concerns about potential unfair practices, such as price discrimination, consumer exploitation, and lack of transparency.
Demands have been issued for information to eight companies involved in AI-powered price setting. These companies include Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co. The commission analyses the development and use of AI tools that allow businesses to charge different prices across their customer base.
“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. 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.” said FTC Chair Lina M. Khan in a press release.
Even though these practices have been used to target specific audiences with personalised ads, the agency is concerned that these practices can now be used to implement surveillance pricing.
This indicates that businesses must ensure their AI systems comply with evolving regulations and industry standards, and companies should be cautious with employing AI with customer data to determine significant business decisions.