Ammon News - You go into a store to buy a two-litre bottle of milk at your local supermarket and pay $3. But the person before you in the queue paid $3.50. And the person after you paid $2. What if those prices were based on your personal data or circumstances, or even the battery power on your phone?

This may sound like science fiction, but it’s not as far-fetched as you might think.

In July, US group Delta Air Lines revealed that approximately 3 percent of its domestic fare pricing is determined using artificial intelligence (AI) – although it has not elaborated on how this happens. The company said it aims to increase this figure to 20 percent by the end of this year.

The news raised concerns among consumers that Delta might be using customers’ data to determine what to charge them. So, US Senators Mark Warner, Ruben Gallego and Richard Blumenthal sent a letter to Delta Air Lines requesting further information about its reported plans to implement AI-driven “dynamic pricing”.

“Delta’s current and planned individualised pricing practices not only present data privacy concerns but will also likely mean fare price increases up to each individual consumer’s personal ‘pain point’ at a time when American families are already struggling with rising costs,” the letter stated.

Although Delta did not deny using AI to set prices, it replied, telling the senators that it does not use it for “discriminatory or predatory pricing practices”.

According to former Federal Trade Commission Chair Lina Khan, however, some companies are able to use your personal data to predict what they know as your “pain point” – the maximum amount you’re willing to spend for a specific good or service.

In January, the US’s Federal Trade Commission (FTC), which regulates fair competition, reported on a surveillance pricing study it carried out in July 2024.

It found that companies can collect data directly through account registrations, email sign-ups and online purchases in order to do this. Additionally, web pixels installed by intermediaries track digital signals including your IP address, device type, browser information, language preferences and “granular” website interactions such as mouse movements, scrolling patterns and video viewing behaviour.

This is known as “surveillance pricing”.


What is surveillance pricing?
Surveillance pricing is the practice of monitoring consumer data to set individualised prices in order to maximise profits for the retailer.

Put simply, having access to your personal information enables retailers to charge you the most they think you will be willing to pay.

In a 2024 research paper, Oren Bar-Gill, legal scholar and economist at New York University, describes surveillance pricing as follows: “Fuelled by big data, algorithmic price discrimination enables sellers to parse the population of potential customers into finer and finer subcategories – each matched with a different price.

“In some cases, sellers are even able to set personalised pricing, marching down the demand curve and setting a different price for each consumer.”

In an interview with economist Robert Reich in July this year, Khan said: “Evidence shows that ride-sharing apps are charging different prices for the exact same rides at the exact same time. It’s not entirely clear, but researchers ran tests and found that riders with lower battery life on their phone were charged more.”

Uber denies it is deliberately targeting any of its app users with higher prices. However, its former head of economic research, Keith Chen, did reveal in an NPR interview in 2016 that the company had discovered that users with low battery life were more likely to accept surge pricing.

“Uber has found that those with a low battery tend to accept the surge price regardless, because they need a ride home that minute, instead of waiting an extra 15 for the surge to possibly go down.

“We absolutely don’t use that to kind of push you a higher surge price, but it’s an interesting kind of psychological fact of human behaviour.”