AUSTIN (KXAN) – U.S. Representative Greg Casar (D-Austin) proposed a bill on Wednesday aimed at prohibiting businesses from utilizing AI pricing technologies to increase costs for consumers.
This law is enacted shortly afternews emerged about Delta Air Linessaid to be preparing to increase the application of an artificial intelligence-driven pricing system to 20% of its local routes by the conclusion of 2025.
“Now that AI is advancing so rapidly, the law must also evolve,” said Casar, who co-sponsored the legislation with U.S. Rep. Rashida Tlaib (D-Michigan). “It should be prohibited for an airline to discover that you’ve searched for a family obituary on Google, and then increase your ticket price because they know you’re desperate to attend a funeral,” Casar explained to KXAN.
According to NBC reporting, Delta president Glen Hauenstein stated that the company aimed to have 20% of its domestic ticket prices determined by the AI system. In a statement, the company mentioned that the tool was not utilizing personal data to modify prices.
“There has never been a fair product that Delta has used, is testing, or intends to use that focuses on customers with personalized offers based on personal data or otherwise. Delta consistently follows rules regarding pricing and disclosures,” the statement said.
Casar stated that his proposed laws would prevent any company from using this method.
“Businesses should be required to set prices according to supply and demand. They should also determine pricing based on the cost of producing a service or product. They shouldn’t be utilizing AI to extract as much money as possible from consumers,” he stated.
How it works
Businesses in the commerce sector have traditionally utilized personalized advertising to connect with customers. Specialists believe the next development could be personalized pricing.
Firms currently employ a method known as dynamic pricing.
“Dynamic Pricing primarily concentrates on changes in supply and demand. Therefore, when there are fewer seats available on the flight, the cost increases,” noted Lindsay Owens, Ph.D., Executive Director of the Groundwork Collaborative, an economic think tank based in Washington, D.C.
“Customized pricing would elevate it to a new level. The cost would be determined, in part, by your specific traits as a customer,” she added.
Owens mentioned that artificial intelligence systems might one day integrate individual information—such as the device you are using, your zip code, or your travel destination—to modify costs.
What zip code are you connecting from? Is it a wealthier area? Perhaps I could charge you a bit more,” she remarked. “Are you using a PC or a Mac? If it’s the latter, maybe I could increase the fee slightly.
“This is the concern regarding where Delta might be heading with their latest AI pricing collaborations,” she continued.
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