Is Your Data Fueling Price Hikes? FTC Launches Crackdown – culturebanx

By Claire Moraa

• The FTC is investigating eight companies suspected of using consumer data to unfairly price their products and services
• Companies that rely on AI-powered pricing dynamics stand to benefit from between 5-20% revenue increase

In a fair world, the pricing of goods and services should be built on transparency, equity and fairness. But because fairness is something we have to fight for, some eight companies are not playing fair and using your data to inflate prices. The Federal Trade Commission (FTC) is looking into claims that these companies, including MasterCard, McDonalds and Starbucks are using surveillance pricing to adjust prices quickly, potentially impacting consumer privacy, competition, and protection.

Why This Matters: AI tools are trained based on repetitive behavior. But it’s not limited to these tools. Browser companies are increasingly integrating AI as part of their features so regardless of whether you want to use it or not, it’s becoming increasingly hard to avoid it. And since most people store their passwords, credit card credentials and other personal information, this data becomes exposed to generative AI looking to feed their models with your information. This means that when you make a purchase online, the more money you use, the more likely you are to be charged more on your next purchase. This can fatten the pockets of the companies behind this as AI-powered dynamics have the potential of increasing revenue up to 20%.

Unfortunately, AI is not exactly known for being impartial. There have been cases of bias and skewed information that affected the end result. For instance, at least 80% of Blacks missed out on mortgages because of AI bias. If companies are using data to strategically increase prices, it could directly affect consumers by making goods and services more expensive. So whether based on racial bias or classism, the implications of these practices on consumers and competition within the market are far-reaching. This brings our focus on the need to put in place regulations on how companies utilize customer data to determine pricing strategies.

What’s Next: While collection of data has previously been fronted as a way of tailoring ads to your needs and preferences, companies are now going overboard. But it’s not all bad. We may enjoy the targeted ads that does the work for us when we search for something and a few seconds later, you have all these options to choose from. The importance of transparency and accountability in how these companies collect and utilize customer data needs to be clear and not to gain an unfair competitive advantage for pricing purposes.

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