AI

FTC Examines the Impact of AI-Driven Surveillance Pricing on Consumers

23 July 2024

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Zaker Adham

The Federal Trade Commission (FTC) has launched an investigation into the use of AI-powered surveillance pricing, which tailors prices to individual consumers based on their data. This probe aims to understand how these practices affect privacy, competition, and consumer protection.

The concept of "surveillance pricing," also known as "dynamic pricing" or "personalized pricing," involves adjusting prices for the same product based on various factors, such as device type, location, browsing history, and demographic data. This approach, while not yet widespread, is gaining traction as businesses explore its potential.

The FTC has requested detailed information from eight companies involved in AI surveillance pricing, including Mastercard, Revionics, Bloomreach, Chase, Task, Pros, Accenture, and McKinsey & Co. The aim is to assess the extent of these practices and their impact on consumers.

Notable examples include JetBlue’s variable checked bag fees, Walmart’s planned digital price tags, and Wendy’s future “dynamic pricing.” Amazon’s secretive Project Nessie also reportedly used algorithms to adjust prices discreetly.

FTC Chair Lina Khan emphasized the need for transparency, stating that consumers deserve to know if their personal data is being used to manipulate prices. The investigation will examine the technology behind these practices and ensure they do not disproportionately affect certain groups.