The Blubber

Consumers could face personalized pricing as AI becomes more widespread, warned FTC Chair Lina Khan during the 2024 Fast Company Innovation Festival.

Khan acknowledged the potential benefits of AI but pointed out that it’s already playing a significant role in the FTC’s ongoing work against fraud. “Some of these AI tools are accelerating fraud because they enable scams to spread more quickly, more cheaply, and on a larger scale,” she said.

AI is not only automating traditional scams like phishing but also introducing concerning new threats, such as voice cloning, which can be used to deceive unsuspecting consumers.

Khan also highlighted a different concern: retailers using AI-powered surveillance tools and consumer data to offer personalized prices to shoppers. She noted that the FTC is investigating AI’s role in potentially increasing price discrimination.

Price discrimination, she explained, differs from dynamic pricing, where businesses adjust prices based on market demand and supply. Both practices are legal if they comply with regulations, but AI’s rise could lead to more situations where consumers are charged different prices based on personal data.

“Given how much personal information digital companies are collecting about us, there’s growing potential for us to be charged different prices based on what they know about us,” Khan said. She gave examples such as people with nut allergies being charged more for nut-free granola bars or restaurants using QR codes to create personalized menus for customers.

She even suggested a scenario where someone is charged more for an airline ticket because the company knows they need to travel urgently due to a family emergency.

In July, the FTC launched a market inquiry, directing eight companies to provide details about “surveillance pricing products and services” that use consumer data like location, demographics, credit history, and browsing habits. The goal is to assess whether such targeted pricing is happening and whether it could harm consumers.

“We don’t want to wake up one day to find this is the new normal,” Khan said. “We need to determine whether this is the kind of economy and society we want to live in, or if we should establish safeguards.”