Consumer apprehension grows as US retailers adopt AI-assisted pricing tools

consumers aren’t just frustrated with high prices. They’re angry and confused about the increasingly high-tech ways that restaurant chains and major retailers are setting those prices. Digital price tags are rapidly replacing paper ones in grocery aisles.

Artificial intelligence tools help businesses decide what to charge by predicting how customers might respond. Terms like “dynamic pricing” and “surveillance pricing” are stirring anxiety on social media, where users wonder if different people are getting different prices for the same product. Americans have grown accustomed to changing prices when booking flights, hotel rooms and rides, but the prospect of everyday spending shaped by algorithms they don’t understand and personal data they may not realize they’re sharing has touched a nerve.

“There are major tensions happening right now between who’s really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper,” said Katie Thomas, who leads an internal consumer behavior think tank at the management consulting firm Kearney. Companies using the technology say some concerns stem from misconceptions about how their pricing tools work. Walmart CEO John Furner said in a blog post last month that digital price tags save workers’ time and keep prices up to date.

He said the labels aren’t used to raise prices based on the weather, time of day or individual shopper. “We price the product, not the person,” Furner wrote. But companies aren’t always transparent about the customer data they collect and how it’s used, which has made consumers suspicious and led to speculation.

For example, social media posts falsely imply that electronic shelf labels Walmart plans to put in all its U.S. stores scan shoppers’ faces or cellphones to set individualized prices, Thomas said. Lawmakers and regulators are taking action.

Legislators in at least 30 states have considered pricing bills this year, including measures addressing algorithmic and personalized pricing, according to the National Conference of State Legislatures. The Federal Trade Commission has proposed an enforcement policy warning businesses that failing to disclose their use of personal data to set individualized prices could violate consumer protection law. Here are some of the pricing practices and technologies drawing scrutiny.