Bad news for shoppers: Consumer advocates warn that digital price labels could result in surge pricing
Retailers and airlines face backlash over AI-driven surveillance pricing, raising concerns about fairness, data use, and surge pricing practices
Last year, major retailers—from Kroger to Walmart—announced plans to replace traditional price tags with electronic ones that can be updated instantly across hundreds of products. This shift enables a practice known as surveillance pricing, which can use AI to adjust prices in real time based on changing demand. One concerning outcome of this is surge pricing.
When Walmart announced in June 2024 that it would expand the technology from a small pilot to over 2,300 stores by 2026, the company emphasized the benefits: reducing the time employees spend changing price tags and allowing them to “spend more time assisting customers and less time on repetitive tasks.” While that may be true in the short term, it’s unclear whether Walmart will eventually reduce staffing if fewer workers are needed.
Kroger, an early adopter of electronic pricing, has faced scrutiny. The company claims the goal is to lower prices for customers, but political leaders remain skeptical. Senator Elizabeth Warren sent a letter to Kroger’s CEO seeking clarity on how digital price tags will be used and whether they could harm consumers. Both Walmart and Kroger have denied plans to implement dynamic pricing, but consumer advocates remain unconvinced of the threat posed to shoppers.
The technology could allow retailers to raise prices within seconds on items like ice cream, sunscreen, or fans during a heatwave. Online shoppers aren’t immune either. With access to personal data, retailers could use surveillance pricing to determine the highest price an individual might pay, charging different customers different prices for the same product. This raises ethical concerns, such as whether a company might hike prices on emergency supplies ahead of a natural disaster.
More industries incorporate surge and surveillance pricing
More recently, Delta Airlines has come under fire from lawmakers and consumer advocates for allegedly adopting a surveillance pricing model—where passengers on the same flight, even those who booked on the same day, may have paid vastly different fares.
This prompted questions from Capitol Hill, including a letter from Senator Richard Blumenthal to Delta’s leadership, seeking clarity on the airline’s use of AI and dynamic pricing systems. Blumenthal raised concerns about data privacy and warned that such a model could “mean fare price increases up to each consumer’s personal ‘pain point’ at a time when American families are already struggling with rising costs.”
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Delta denied the accusations, stating: “There is no fare product Delta has ever used, is testing, or plans to use that targets customers with individualized offers based on personal information or otherwise.” However, this statement came after Delta President Glen Hauenstein said at the company’s Investor Day that the airline was “reengineering” its pricing strategy. “This is a full reengineering of how we price and how we will be pricing in the future,” Hauenstein said, according to Fortune. He added that AI would help the company tailor pricing for “the individual.”
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