Democrats propose ban on AI pricing after Delta expands dynamic fares

Democratic lawmakers have introduced legislation to ban companies from using AI to charge different prices based on personal data surveillance, directly responding to Delta’s announcement that it will expand AI-powered pricing to 20% of its fares by year-end. The Stop AI Price Gouging and Wage Fixing Act would allow customers and workers to sue companies for unfairly using AI to increase prices or decrease wages based on personal information like financial status, desperation levels, or demographics.

What you should know: The proposed law targets what lawmakers call “surveillance-based” pricing and wage setting that exploits personal data to maximize corporate profits.

• Companies would be prohibited from using AI to charge customers higher prices based on “how desperate a customer is for a product and the maximum amount a customer is willing to pay.”
• The legislation also bans using AI to pay employees lower wages based on “their financial status, personal associations, and demographics.”
• Violations would require companies to pay back unfair transaction differences or $3,000—whichever is higher—with willful violations tripling damages owed.

The big picture: A Federal Trade Commission investigation revealed that at least 250 companies across industries—from grocery stores to apparel retailers—are already using AI pricing services from eight major providers including MasterCard, JPMorgan Chase, and McKinsey, a global consulting firm.

• The FTC concluded that “widespread adoption of this practice may fundamentally upend how consumers buy products and how companies compete.”
• Beyond Delta, companies “engaging in surveillance-based price setting” include Amazon, Kroger, and ride-sharing apps that charge customers more when their phone battery is low.

Why this matters: Advocacy groups warn that AI surveillance pricing could worsen America’s affordability crisis as grocery prices have already risen 26% since the pandemic-era explosion of online shopping.

• “There is no such thing as a good deal when every consumer is charged a different price,” warned Lee Hepner from the American Economic Liberties Project, an anti-monopoly watchdog.
• The practice extends beyond pricing to wage manipulation, with delivery services lowering driver pay based on their “pattern of taking orders” and healthcare companies basing nurse wages on “algorithmically-manipulated-bidding wars.”

What they’re saying: Lawmakers emphasized the urgency of addressing AI-powered exploitation before it becomes widespread.

• “Giant corporations should not be allowed to jack up your prices or lower your wages using data they got spying on you,” said Rep. Greg Casar (D-Texas).
• “Whether you know it or not, you may already be getting ripped off by corporations using your personal data to charge you more. This problem is only going to get worse, and Congress should act before this becomes a full-blown crisis.”
• Rep. Rashida Tlaib (D-Mich.) called companies using AI to “exploit” workers in “desperate” situations “appalling.”

Political challenges: The bill faces uncertain prospects as Republican FTC commissioners have already opposed related investigations.

• Commissioners Andrew Ferguson and Melissa Holyoak voted against releasing the FTC report on AI surveillance pricing, criticizing the Biden administration for “nakedly” politicizing the agency.
• However, they acknowledged that the American public and Congress “will surely value” what the Commission learns about how consumers’ private data affects their finances.