Federal Trade Commission (FTC) Chair Lina Khan has raised concerns about the potential misuse of AI by airlines to charge higher prices for passengers attending funerals.
What Happened: Speaking at the 2024 Fast Company Innovation Festival, Khan highlighted the risks AI poses in enabling fraud and price discrimination. She emphasized that AI tools are accelerating scams and allowing personalized pricing based on consumer data, Business Insider reported on Wednesday.
Khan explained that AI is already automating traditional online scams like phishing and introducing new frauds such as voice cloning. She also warned about retailers using AI-driven surveillance technology to adjust prices for specific shoppers.
The FTC is investigating AI’s role in price discrimination, which differs from dynamic pricing which adjusts prices based on market conditions. Khan noted that AI could lead to varied prices based on personal data collected by digital companies.
She provided examples, such as people with nut allergies being charged more for granola bars or restaurants using QR codes for personalized menus.
“Or somebody being charged more for an airplane ticket because the company knows that they just had a death in the family and need to fly across the country,” Khan said.
In July, the FTC issued a market inquiry to eight companies to provide information on “surveillance pricing products and services” that use consumer data. Khan stressed the importance of examining this practice to determine its impact on consumers.
Khan concluded by questioning whether society wants to accept such targeted pricing or implement regulations to prevent it. She also noted that dynamic pricing in areas like ride-sharing has made people more accustomed to variable pricing.
Why It Matters: The concerns raised by Khan about AI-driven price discrimination come amid broader scrutiny of tech companies’ data practices.
Last week, the FTC criticized major tech firms like Amazon.com Inc. and Meta Platforms Inc. for their extensive data collection and monetization practices, which pose significant privacy risks to consumers.
Moreover, in December CNBC’s “Mad Money” host Jim Cramer criticized Khan’s policies, arguing that her stance on mergers and acquisitions is negatively impacting investor returns. Cramer referred to her as a “one-woman wrecking crew” for stock portfolios, highlighting the tension between regulatory oversight and market performance.
Additionally, in July 2023, Elon Musk accused Khan of bias and overreach in the FTC’s privacy investigation into Twitter (Now known as X). Musk’s allegations underscore the contentious relationship between the FTC and tech giants, as they navigate the complex landscape of data privacy and consumer protection.
In April, Apple Inc. was called out by Jon Stewart for allegedly blocking an interview with Khan on his podcast. This incident highlights the ongoing antitrust investigations into Apple’s business practices and market dominance.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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