Surveillance pricing': Why you might be paying more than your neighbour

"You go into a store to buy a two-litre bottle of milk at your local supermarket and pay $3. But the person before you in the queue paid $3.50. And the person after you paid $2. What if those prices were based on your personal data or circumstances, or even the battery power on your phone? This may sound like science fiction, but it's not as far-fetched as you might think."

"In July, US group Delta Air Lines revealed that approximately 3 percent of its domestic fare pricing is determined using artificial intelligence (AI) although it has not elaborated on how this happens. The company said it aims to increase this figure to 20 percent by the end of this year. The news raised concerns among consumers that Delta might be using customers' data to determine what to charge them."

"According to former Federal Trade Commission Chair Lina Khan, however, some companies are able to use your personal data to predict what they know as your pain point the maximum amount you're willing to spend for a specific good or service. In January, the US's Federal Trade Commission (FTC), which regulates fair competition, reported on a surveillance pricing study it carried out in July 2024."

Companies and retailers are increasingly using AI to implement dynamic, individualized pricing that can produce different prices for identical goods based on customers' personal data, device attributes, or circumstances. Airlines such as Delta report that a portion of fares is already set by AI and intend to expand AI-driven pricing significantly. Elected officials and regulators have raised privacy and fairness concerns and have requested details about how AI influences pricing decisions. Consumer advocates warn that companies can predict each customer's "pain point" — the maximum a person will pay — risking discriminatory or predatory price targeting and worsening affordability for vulnerable households. Regulatory studies are investigating how companies collect and use data to tailor prices.

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