Comer Investigates Use of Artificial Intelligence to Set Prices for Consumers
WASHINGTON—House Committee on Oversight and Government Reform Chairman James Comer (R-Ky.) is examining the use of artificial intelligence (AI) to conduct surveillance pricing of consumers that artificially increases the prices of goods and services. In letters to Booking Holdings, Expedia Group Incorporated, Uber, Lyft, and Instacart, Chairman Comer requests documents and information to better understand the policies guiding these companies’ respective pricing practices.
“Companies utilizing surveillance pricing deploy algorithms in conjunction with ‘harvested’ personal data to determine a consumer’s emotional state, purchase intent, maximum willingness to pay (or so-called ‘pain point’) and an individualized price is tailored accordingly. Often this takes place in a ‘black box’ environment where consumers do not know that personalized pricing is taking place or what information collected about them are driving prices. Surveillance pricing can be difficult to detect because consumers rarely have a view into what information a company has about them, what the prices they see are based on, or what prices other customers may be seeing for the same goods or services—making it difficult for consumers to make informed purchasing decisions,” wrote Chairman Comer.
Companies use consumer data in price surveilling to create digital profiles based on individualized data such as geolocation, demographics, browsing history, purchase history, device type, battery life, and mouse clicks to assign different prices to different individuals in ways consumers cannot understand, anticipate, or control. For example, a recent report indicates that Uber deploys AI-based pricing technology that prices identical products differently from one customer to the next by an average of 11 percent. Another report investigating Uber pricing shows a 221 percent price difference in fares for two different users for the same trip in an identical time frame — one user was quoted $76.82 while the other was quoted $23.92. This request for information is part of the House Oversight Committee’s larger investigation into pricing opacity and dedication to providing price transparency to consumers.
“To be clear, the Committee is supportive of the advancement and use of artificial intelligence tools that allow companies to align prices with demand fluctuations, consumer preferences, and operational costs to promote efficiency and greater market responsiveness. However, the rise of surveillance pricing algorithms coupled with highly personalized consumer data may create arbitrage opportunities for companies to ‘weaponize personal data’ and pad their profit margins at the expense of providing transparency to the consumer,” concluded Chairman Comer.
Read the letters here: