Marketplace®

Daily business news and economic stories

AI and ‘surveillance’ pricing may squeeze wallets more

Fast, efficient analysis of customers’ shopping and social media habits gives companies a leg up when it comes to dynamic pricing.

Download
Delta's plans to use AI to set a larger share of ticket prices has prompted backlash from members of Congress.
Delta's plans to use AI to set a larger share of ticket prices has prompted backlash from members of Congress.
Yuri Cortez/AFP via Getty Images

Delta Airlines has been in the news the last couple of weeks after the company announced on an earnings call it planned to use AI to set a larger share of its ticket prices moving forward.

This prompted backlash from members of Congress with one member of the House even introducing legislation to ban what many are calling “Surveillance Pricing.”

Just how common is this type of thing? And what opponents are trying to do about it?

Companies these days have access to a ton of data on us, and companies seem to have no qualms about using it.

“Surveillance pricing is the practice of targeting an individual for an individual price based on sensitive data that you know about them,” said Pat Garofalo with the American Economic Liberties Project.

But what some call surveillance pricing, to many retailers is just pricing, and it’s everywhere.

“It is basically an automated way of doing things that retailers have been doing for decades, if not longer,” said Stephanie Martz, general counsel for the National Retail Federation. “Which is gathering information about what customers are willing to pay what their competitors are charging, and figuring out the best price to set for various items.”

From coupons and discounts attached to loyalty programs to surge pricing for rideshare.

“The use of, you know, prices that are not constant, some form of dynamic pricing is known to be relatively common,” said Trevor Wagener of the Computer and Communications Industry Association. “But in most instances, it's not controversial.”

But what’s different now is just how much data is floating around out there about us. And how good and fast the A-I tools are getting at connecting it.

Which is why several states are working on legislation to limit the practice or make retailers disclose when they do it.

“Because of corporate concentration and more and more of this data sharing, these companies are able to target us in new ways because this data is so intimate,” said Ida Eskamani, who runs legislative affairs at the State Innovation Exchange.

She’s worried companies might use that data not just for discounts, but to charge consumers more when they are in a bind. Or when they really need to book that flight.

Related Topics

Latest Episodes

View All Shows
  • Marketplace
    3 hours ago
    25:19
  • Make Me Smart
    9 hours ago
    19:00
  • Marketplace Morning Report
    11 hours ago
    6:55
  • Marketplace Tech
    16 hours ago
    8:33
  • This Is Uncomfortable
    3 days ago
    56:05
  • Million Bazillion
    24 days ago
    32:45