AI pricing: Pay more than your neighbor?
ST. PAUL, Minn. (FOX 9) - Artificial intelligence is changing how prices are set at grocery stores and other businesses, and Minnesota lawmakers are stepping in to address concerns.
AI-driven pricing
What we know:
Surveillance pricing uses AI to determine how much a customer is willing to pay for an item. This can result in different prices for different people based on various metrics set by the stores.
Rep. Carlie Kotyza-Witthuhn of Eden Prairie highlighted the need for regulation, saying, "When corporations are kind of pushing the boundaries of where regulation or legislation haven't yet caught up, we just want to make sure that we are setting that framework to protect folks going forward."
The backstory:
The concept of fixed prices began in the 19th century with price tags, ending haggling and price discrimination. However, electronic price tags and shopping apps are bringing these practices back, prompting lawmakers to take action.
Testing the impact
What they're saying:
Despite concerns, Tahra Hoops from the Chamber of Progress noted, "Despite years of headlines about surveillance pricing, there's no comprehensive evidence that consumers are being systematically harmed by personalized pricing."
FOX 9 tested grocery apps to see if different people would pay different prices for the same items at the same store. One shopper did pay more for soy sauce, eggs, and orange juice compared to another shopper at the same store.
Although the apps have a very similar appearance, a Cub Foods representative told FOX 9 they believe the price discrepancy arose because the buyers used different apps for the same store — one on Cub's app and the other on a third-party vendor’s app, which had the more expensive prices.
"Cub is committed to clear, honest, and fair pricing for every shopper," they said. "We do not use AI to set individual prices for our customers."
What's next:
Two bills introduced by DFL lawmakers aim to ban surveillance pricing—one focusing on grocery stores and the other on all other businesses.
What we don't know:
It remains unclear how these proposed bills will impact businesses that have invested in dynamic pricing technology.