James Comer is Chairman of the House Oversight Committee. | https://oversight.house.gov/chairman-james-comer/
House Committee on Oversight and Government Reform Chairman James Comer (R-Ky.) has launched an inquiry into how companies use artificial intelligence (AI) to set prices for consumers. Comer sent letters to Booking Holdings, Expedia Group Incorporated, Uber, Lyft, and Instacart seeking documents and information about their pricing policies.
“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.
The committee is focusing on the use of consumer data such as geolocation, demographics, browsing history, purchase history, device type, battery life, and mouse clicks. This data helps companies build digital profiles and assign different prices to individuals in ways that are not transparent or easily understood by consumers.
Reports have shown that Uber uses AI-based technology which can result in identical products being priced differently for different customers by an average of 11 percent. Another investigation found a 221 percent difference in fares between two users for the same trip at the same time; one user was quoted $76.82 while another received a quote of $23.92.
This request for information is part of the House Oversight Committee’s broader investigation into opaque pricing practices and its efforts to increase price transparency for 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.
