Avi Lewis wants to ban ‘surveillance’ pricing. Here’s what that means

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The practice isn’t as well studied in Canada but anyone who’s tried booking a flight online will likely have seen a personalized price. Bednar said there’s evidence that airlines use up to 1,000 data points to determine the price of each plane ticket.

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“A dream of mine is to be able to board a flight and see how much everyone around me has paid for their seat,” joked Bednar.

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Would a ban lower prices?

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Mike von Massow, a professor of agricultural economics at Guelph University, said that a ban on surveillance pricing is unlikely to make much of a dent on the price of groceries and other everyday essentials.

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“Groceries are something we buy all the time, so the average consumer has a good idea of how much two litres of milk or a dozens eggs should cost,” said von Massow.

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“It doesn’t make much sense, from a business perspective, to try to upcharge certain customers and risk losing them to a competitor,” he added.

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Von Massow said that the staples consumers buy at grocery stores, such as milk, bread and meat, tend to be “loss leaders” designed to get them inside the store and, if anything, the shift to a digital marketplace has shifted power back to the buyer.

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“The traditional model was to put the staples at the back of the store, in the hopes that consumers would grab some impulse items on their way to get them,” said von Massow. “It’s obviously harder to do that when people are buying groceries on an app.”

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Efforts to incorporate algorithmic pricing into the food service industry have similarly failed due to consumer price sensitivity. One recent example is Wendy’s disastrous 2024 experiment with dynamic pricing.

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Could a ban inadvertently raise prices?

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Van Massow says this is a more likely scenario.

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“Depending on how it’s worded, a ban on personalized algorithmic prices could end up eliminating things like customer loyalty programs,” said van Massow.

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Van Massow said that such a ban could also threaten online booking sites that use algorithms to match users with the lowest possible prices.

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What’s the alternative?

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Another option is to increase transparency surrounding the use of algorithmic pricing.

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South of the border, 33 states and Washington, D.C. have introduced dynamic price disclosure laws requiring retailers to inform consumers when real-time data or artificial intelligence are used to set prices. Some states have also introduced consumer protection measures limiting the use of certain personal information in setting individualized prices.

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U.S. Senator Amy Klobuchar has proposed federal legislation that would require businesses to disclose algorithmic pricing and give regulators the power to audit these algorithms in cases of suspected consumer protection violations.

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Bednar said that existing federal laws, such as the Privacy Act and Competition Act, could be updated to make algorithmic pricing more transparent and ward off its predatory use.

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National Post
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