AI Draining Our Wallets: An Examination of Financial Impact
In the rapidly evolving world of technology, artificial intelligence (AI) is increasingly being used to personalize prices for customers. This trend, reminiscent of the bustling bazaars of old, where merchants estimated the purchasing power of each individual before naming their price, is now being facilitated by AI.
One of the key areas where AI-generated prices are being observed is online trading, with indications of their use in Switzerland. However, competition in the market may prevent intervention by the price supervisor, making regulation a complex issue.
The practice of dynamic pricing, where prices change based on demand and supply, is common. But the use of AI to incorporate personal characteristics, such as purchasing power, special preferences, location data of travels and restaurant visits, and whether a customer is choosy in their purchases, raises concerns about fairness and transparency.
Customers have the right to object to automated data processing or demand that automated individual decisions be reviewed by a human. This right is crucial in the context of AI-generated prices, ensuring that individuals are not unfairly profiled or overcharged.
Recent studies, including those by the University of Applied Sciences Wedel (D), "Market Screener", Internet Ombudsman Austria, and KOF-ETH-Zürich, have explored the implications of personalized prices. The findings suggest that while there are benefits, such as discounts based on customer profiles like Migros' Cumulus accounts and Coop's Supercard accounts, there are also risks, such as AI generating false assumptions that could lead to higher prices.
In the US, the case of American airline Delta Airlines serves as a cautionary tale. The airline initially planned to use AI-generated personalization but scaled back its plans after criticism from Democratic senators and investors. Some US companies are planning to make prices dependent not only on external conditions but also on personal characteristics of customers.
The progress of more personalization in marketing and pricing is likely to continue, making it essential for regulators and consumers to stay vigilant. The Data Protection Act requires concrete information and transparency from manufacturers, providers, and users of AI systems regarding the purpose, function, and data sources of AI-based processing.
In Switzerland, the Federal Data Protection Officer, the Price Supervisor, and the State Secretariat for Economic Affairs (Seco) have made statements regarding personalized prices and AI. Seco states that providers are free to set prices, even if they are personalized with AI, as long as they are transparently stated and not misleading.
However, the use of AI in pricing is not without its challenges. As demonstrated in a self-experiment, AI can generate false assumptions that could lead to higher prices. To avoid overpriced prices, tips include using a VPN, regularly deleting cookies, not sharing personal information with AI, hesitating before making a purchase, disabling location access, blocking advertising ID, avoiding ad-supported apps, and prohibiting apps from using the MAID.
This article was first published on August 13, 2025, and serves as a reminder of the ongoing debate surrounding AI and personalized pricing. While the benefits of personalization are clear, ensuring fairness and transparency in AI-generated prices is crucial for maintaining trust in the digital economy.
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