US Retailers Face Backlash Over AI Dynamic Pricing
Major US retailers and restaurant chains are facing regulatory scrutiny and lawsuits over the use of AI-driven dynamic and surveillance pricing tools.
U.S. consumers are increasingly anxious over the adoption of AI-assisted pricing tools by major retailers and restaurant chains. The transition to digital price tags and algorithmic systems has raised fears of surveillance pricing, where personal data is used to set individualized costs for customers.
Walmart is implementing digital price tags across all its U.S. stores. The company maintains that these labels improve efficiency rather than targeting individuals. However, the Federal Trade Commission has proposed policies warning against undisclosed personalized pricing, and legislators in at least 30 states are considering related bills. Maryland, New Jersey, and Connecticut have already enacted restrictions on using personal data to determine prices.
Legal actions are mounting against several industry leaders. Target Corporation paid a $5 million settlement over allegations that it used geofencing to increase prices. McDonald's is facing a consumer lawsuit alleging the use of nonpublic sales data to coordinate pricing. Simultaneously, the FTC is pursuing an anti-monopoly lawsuit against Amazon.com regarding its Project Nessie tool, which the agency claims generated over $1 billion in excess profits by manipulating competitor pricing.
