As never before, Canadian consumers must vigilantly compare prices and know who and what’s behind the price offers made to them, because powerful artificial intelligence could be used to construct and control access to those offers, new research by the Consumers Council of Canada warns.
"A hot area in the development of 'artificial intelligence' and information technology is broadly called 'dynamic pricing,'" said Consumers Council of Canada President Don Mercer. "Consumers are familiar and comfortable with kinds of dynamic pricing that have been around awhile, like volume or seniors discounts, but are uneasy when sellers know too much about them as individuals when making a price offer. Also, some practices, like supply and demand pricing are creating anxiety when applied in new ways that increase consumer vulnerability."
The Council’s latest research report Dynamic Pricing – Can consumers achieve the benefits they expect? found a growing marketplace of application service providers promising to significantly increase retailers' profits from consumers through dynamic pricing algorithms and strategies.
This development could affect both online and in-store pricing, the Council's research found.
"'Big data' and increased opportunity to track individual consumers through their lives online, when interacting with rewards programs and electronic point of purchase systems and as they move around within online and bricks and mortar stores leads consumers to reveal a lot about their personal attributes, habits and intentions," said Mercer. "The playing field is tilting in favour of merchants after a brief period of greater price transparency created by the Internet."
The report identifies new approaches to price-setting as limiting consumer choice, because price offers become less durable, and can disable consumers' ability to compare prices and shop around. The report recommends requiring typical retail price offers to be on offer to a consumer long enough to facilitate comparison shopping, or otherwise ensure a level playing field for both buyers and sellers.
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Consumers Council of Canada has received funding from Innovation, Science and Economic Development Canada’s Contributions Program for Non-profit Consumer and Voluntary Organizations. The views expressed in this report are not necessarily those of Innovation, Science and Economic Development Canada or the Government of Canada.