Never doubt the creativity of state and federal politicians when it comes to rescuing Americans from problems that do not exist or are vastly overblown, while working the public into a tizzy.
A case in point: fears being stoked about surveillance pricing, the concept that vast amounts of data integrated with AI will allow merchants and marketing platforms to gouge customers.
As Walmart said in strongly disavowing the practice, it involves “different prices on the same products based on their (customers) personal data such as age, gender, race, and income, or raising prices when customers are most likely to shop.”
It sounds bad and it is. In fact, there are already many laws against it.
Indeed, America’s free market and information-rich society would exert a financial pounding on any company that tried to adopt this practice, likely outdoing whatever punishment regulators could exert. This would come vis-à-vis a loss of business reputation and a public branding of the merchant being highly deceptive.
Yet, the Federal Trade Commission is considering an enforcement policy even though it says surveillance, or personalized pricing, merely “has the potential to transform our history of relatively limited variation in pricing” and that the practice “is not well understood.” It adds there is “growing public concern” this may happen, yet it has not charged any company with this practice.
This comes on top of 50 bills on surveillance pricing pending across 26 states.
Ironically, regulations and legislation on surveillance pricing could impede the wide array of discounts on widespread traditional personalized pricing that merchants and online platforms provide. Government dictates on pricing uniformity, coupled with huge potential fines, will have intended or unintended consequences for well-established discounts, by creating a climate in which companies hesitate to offer them.
These include referral discounts, loyalty programs, points programs, app sales, volume/bulk discounts, student discounts, and many more.
Look for any regulation in this area to slow down online shopping, generating a host of unnecessary disclaimer prompts and longer printed information on receipts that will showcase fine print legalese in new settings.
The FTC and state officials should pivot on the issue – and trumpet the many benefits that AI and online shopping and browsing offer.
Today, customers can check more websites, more quickly, than ever before to get the best deals. They can also track pricing histories through an online feature on Amazon that lists items’ prices going back a year.
At a minimum, the FTC should devote more time to studying personalized pricing before even attempting to craft an enforcement policy. There also needs to be more academic research on the topic in general. Putting even the vaguest and most general enforcement policy in place could also lead to it being more easily significantly expanded in the next administration that has a Lina Khan-type FTC chair.
One option is for the FTC, perhaps with President Donald Trump, to have a public forum discussing ways in which tech and AI are being used by consumers to get lower prices. This may also help to disabuse state legislators that there are actual threats to consumers from surveillance pricing.
Today, with our phones and e-mails lighting up from repeated scam attempts, there is plenty of actual fraud for the FTC and state authorities to focus on to protect consumers. There is no need to invent new problems. In fact, doing so is highly irresponsible and takes the focus off of issues that should be of primary concern.
