Many American consumers have become accustomed to fluctuating prices for things including Uber rides and flights. However, as more companies start to use personalized pricing, which takes a consumer’s personal data such as shopping history, app usage, internet engagement and mouse clicks into account, fluctuating prices could become a part of everyday purchases.
According to a recent U.S. Senate Committee on the Judiciary hearing titled “Your Data, Their Profit: The Consumer Cost of AI Surveillance Pricing”, companies such as Walmart and Kroger have pursued technological renovations that would allow the use of personalized pricing in stores.
LaTanya White, Ph.D, the associate director of the Howard University & PNC National Center for Entrepreneurship said she questions the ethics of two consumers being offered different prices for the same product.
According to White, fluctuating prices are typically a result of dynamic pricing, which is how price responds to market conditions. Personalized pricing combines market conditions with consumer data, allowing companies to price products based on how they think a specific consumer would buy in specific market conditions. The highly personal use of technology is why many have come to call personal pricing “surveillance pricing.”
“We have to basically be at the will of the organizations that are selling the shoes, the food, the clothes, the hair products, all of those things.” White said.
She added that the use of consumer data and the increase of artificial intelligence (AI)-driven workplaces are increasing a company’s profit margin. The technology allows companies to save on human capital, while offering the highest possible price in retail.
Lindsay Owens, who serves as president of Groundwork Collaborative, an economic policy think tank, testified at the hearing. Owens explained that prices could change instantaneously at grocery chains like Walmart and Kroger, despite the practice’s direct opposition to American economic values like market fairness and price transparency.
“With this technology in hand, stores can adjust prices depending on the time of day, the day of the week, the location of the shopper, the number of other customers, the weather outside, or any other criteria imaginable,” Owens said during the hearing.
Ava Jackson, a sophomore history major from Memphis, Tennessee, said she tries to keep her grocery bills down by shopping at lower-priced grocery stores like Walmart and budgeting before she goes to the store.
“I have noticed shopping on the [Walmart] app, it’ll be a little more expensive if I’m using a different card or something,” said Jackson. “Even in stores, with their dynamic pricing, the price will change between the time you pick it up and the time you get to checkout,” she added.
Jackson dislikes the idea of AI integration into her grocery shopping habits.
“They know what they’re gonna do. And we know as a general public that it’s gonna end up affecting us,” said Jackson, pointing to the possible impacts that new technologies will have on the working class.
Currently, there is little regulation around AI, online data collection and the selling of personal data. Roy L. Austin Jr., director of the Howard Law AI Initiative, which provides technical legal advice for minority-developed software startups and studies the racial wealth inequality within the tech industry said, the strongest source of AI regulation comes from the European Union (EU).
“These are all international products, so companies have to follow it if they want a foothold in Europe,” he said.
The EU AI Act sets forth a system to monitor, regulate and restrict AI software and criminal uses of AI. The Act has no clear restriction on gathered personal data for commercial use.
On Aug. 19, the Federal Trade Commission (FTC) released its proposed enforcement policy on personalized pricing. The FTC found that personalized pricing likely violates Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.”
The FTC’s proposed policy would force retailers to disclose which prices are personalized, what data is being weighed in that price and how to opt out of personalized pricing. The policy will receive public comment through Sept. 25 before being enforced.
According to both White and Austin, individuals seeking to avoid personalized pricing can turn on privacy settings for personal devices like phones and laptops. Individuals should also deny cookies, opt out of loyalty programs and never provide artificial intelligence software with personal data.
Copy edited by Sydney Middleton
