Source: Radio New Zealand
123RF
There is concern that Artificial Intelligence could be used to get customers to pay more, with one expert calling for legislation to block the use of dynamic pricing in supermarkets.
The government’s amendment to the Commerce Act, which is expected to pass in the middle of the year, includes giving the Commerce Commission more powers in combating predatory pricing.
But University of Sydney researcher Lisa Asher said the legislation was not explicit enough in stating that retailers must be held accountable for price changes made by Artificial Intelligence (AI) monitoring.
She told Nine to Noon that supermarkets in the United States are using data about customers to change pricing in online shopping.
Asher said the incoming legislation here does not go far enough to stop the same from happening in New Zealand.
“Pricing algorithms is when there is monitoring that is happening via systems and they are looking at competitive pricing, web-scraping or looking through the internet and adjusting pricing based on that for a particular retailer,” Asher said.
Dynamic pricing strategies could take advantage of consumers and the information they have about their purchasing habits. For example, they could charge a customer more if they know the customer always buys the same product.
“You’ve got your loyalty card, your purchase history, whether you bought on-or-off promotion, whether you tend to buy lower-value products or higher-value products – that sort of mix – to then adjust the price based on what is the maximum price they think you can charge, which is, in essence, price gouging,” Asher said.
AI can exacerbate this.
Asher said this sort of conduct has been seen on online platforms like Amazon in the US.
But it’s not just online stores. US law makers have raised the alarm over dynamic pricing in grocery stores via electronic shelf labels that allow stores to adjust prices instantly. They fear AI could be used to price-gouge customers at check-out.
Asher said the UK and European Union markets are moving to put into law that a company is held accountable for any changes in pricing done by AI.
“They need to be held accountable for any systems or programmes that they decide to implement in their business,” she said.
Woolworths New Zealand told Nine to Noon it does use electronic shelf labelling in almost all stores, but it does not use dynamic or any personalisation in pricing.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
