You're Not Going Crazy — You May Actually be Paying Higher Prices Than Other People

upstart writes:

You're not going crazy - you may actually be paying higher prices than other people | CNN Business:

It's hard not to get fired up by how much more everything costs compared to just a few years ago. But people making the same exact purchases as you aren't necessarily paying the same exact prices as you.

This became apparent to me a few weeks ago when a friend texted me that Starbucks was running a buy one, get one free drink promotion. But when I logged in to the app, the offer was nowhere to be found.

Why was my friend getting special treatment?

It's likely that Starbucks used artificial intelligence to determine that my friend, if offered a promotion, would make a purchase they wouldn't otherwise have, whereas I would make a purchase regardless, said Shikha Jain, a lead partner in the North American consumer and retail division at the consultancy firm Simon-Kucher.

The system nailed it for me - just opening the app to check if I had the promo got me to order, and I paid full price.

[...] The Seattle-based coffee chain declined to share what feeds into its AI model, dubbed Deep Brew. A spokesperson did, however, confirm that AI is powering the individualized offers it sends customers.

This personalized promotion strategy is not unique to Starbucks. Companies are increasingly leveraging customer data, often derived from loyalty programs, in coordination with machine-learning models to customize prices of goods and services based on an individual's willingness to pay.

[...] On Tuesday, the Federal Trade Commission sent orders to eight companies - Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co - seeking information on how they allegedly offer surveillance pricing and services "that incorporate data about consumers' characteristics and behavior."

The orders seek to understand how technologies like AI along with consumers' personal information could be used "to categorize individuals and set a targeted price for a product or service," according to an announcement the FTC published Tuesday morning.

"Firms that harvest Americans' personal data can put people's privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices," FTC Chair Lina Khan said in a statement.

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