FTC Warns Airlines Could Use AI to Charge More for Going to Funeral
At the 2024 Fast Company Innovation Festival, FTC Chair Lina Khan warned about the increasing role of AI in consumer fraud and price discrimination. While AI can offer benefits, Khan noted that it is also facilitating scams like phishing and voice cloning. More concerning, she pointed out, is AI’s potential to enable retailers to use consumer data to charge personalized prices, a practice distinct from dynamic pricing, which adjusts based on market conditions.
Khan explained that companies could use AI and data on customers’ personal information to set prices uniquely for each individual. For example, a person with allergies could be charged more for allergen-free products, or a bereaved person might pay higher airline fares due to their urgent travel needs. The FTC is investigating whether such targeted pricing is happening and its potential harm to consumers.
Khan emphasized the need for caution, suggesting that society should reflect on whether this is the kind of economy we want, and if regulatory guardrails are necessary. Dynamic pricing, already in use in ride-sharing and potentially expanding to fast food chains like Wendy’s, has sparked controversy. There are concerns that AI-driven price changes on essentials like groceries could create instability, making budgeting harder for consumers.
In response, the FTC has launched a market inquiry into surveillance pricing to examine how consumer data is being used in pricing strategies.