Algorithms Set Personalized Online Prices for Consumers

Consumers are increasingly encountering online prices tailored to their individual shopping habits and data. Lindsay Owens, president and CEO of the Groundwork Collaborative think tank, details in her new book, "Gouged: The End of a Fair Price — And What That Means For Your Wallet," how surveillance-based price discrimination and AI shopping assistants lead to higher prices on everything from airline tickets to groceries.

According to Owens, companies gather in-depth information on customer purchasing habits, location, and even loyalty programs to determine how much they can charge. She testified on this issue before a U.S. Senate Judiciary Subcommittee hearing that explored companies' ability to manipulate prices using AI and data collection. Owens states that large corporations like Walmart, Kroger, and Instacart utilize this data for their modern pricing tactics.

"Surveillance pricing isn't just unfair. It erodes transparency and predictability and makes it harder for families to budget," Owens said. She added that consumers have no way of knowing if they are being charged a different price than their neighbor, especially when shopping online and on mobile devices.

The U.S. Federal Trade Commission (FTC) has warned that companies employing such tactics may be breaking the law. The FTC stated that consumers reasonably expect the price to be the same for everyone in the same store or on the same website, not a price based on individual data.

Owens suggests that change will require government intervention, including banning manipulative pricing practices. Approximately two dozen states have already introduced bills addressing surveillance pricing. Furthermore, Owens advocates for a "shopper's bill of rights" that would include demands for pricing products, not people, and transparent pricing.