AI and personalized pricing prompt regulatory scrutiny

Regulators and consumer advocates are raising concerns regarding the use of artificial intelligence and personal data to implement “personalised pricing.” In the United States, the Federal Trade Commission is consulting on enforcement policies to address fears that sophisticated algorithms could allow businesses to tailor prices and discounts to the specific financial limits of individual customers.

In New Zealand, Consumer NZ has warned that the extensive data collected through supermarket loyalty programs could provide retailers with detailed insights into shopping habits, potentially revealing how much individual customers are prepared to pay. While there is currently no evidence that New Zealand supermarkets are using this data for individual pricing, the trend highlights a growing imbalance in the AI-driven economy.

Experts note that these algorithms reduce uncertainty for firms more rapidly than for consumers or workers. This capability extends to the labor market, where algorithms may help employers determine the lowest wage an individual is willing to accept, potentially shifting the balance of power in economic transactions.