US House committee wants travel companies to answer questions on AI use for pricing

By David Shepardson

WASHINGTON, March 5 (Reuters) - The chair of the U.S. House Oversight Committee on Thursday asked the CEOs of five major travel companies including Uber UBER.N, Lyft LYFT.O and Expedia EXPE.O to disclose whether they were using surveillance pricing of consumers to hike costs.

Representative James Comer, the Republican chair of the committee, raised concern in letters to the companies that the rise of surveillance pricing algorithms and use of highly personalized consumer data may create opportunities "for companies to weaponize personal data and pad their profit margins at the expense of providing transparency to consumers."

Surveillance pricing is a strategy where companies use a consumer's personal data — such as browsing history, location and shopping habits — to set individualized, algorithmic prices for products, as opposed to using standard, market-wide pricing.

Comer said in letters first reported by Reuters that travel companies utilize surveillance pricing to deploy algorithms that determine a consumer’s emotional state, purchase intent and maximum willingness to pay, and that an individualized price is tailored accordingly.

Comer cited a media report that Uber deployed AI-based pricing technology to offer varying prices for identical products. Uber said on Thursday it does not engage in surveillance pricing and does not personalize prices. "Fares are determined by factors like location, time, and demand, not by a customer’s individual characteristics, past behavior, or device information," Uber said.

The other companies that received letters, which also include Booking.com BKNG.O and Instacart CART.O, did not immediately respond to requests for comment.

Comer's letters seek documents by March 19 including communications detailing revenue management algorithms and their financial impacts.

"Often this takes place in a 'black box' environment where consumers do not know that personalized pricing is taking place or what information collected about them are driving prices," Comer wrote.

Comer noted that companies use consumer data to create a “profile” based on individualized data such as "geolocation, demographics, browsing history, purchase history, device type, battery life, and even mouse clicks to assign different prices to different individuals."

California Attorney General Rob Bonta announced in January a broad probe into the practice of using personal data to set individualized prices.

In November, two dozen U.S. House Democratic lawmakers asked Delta Air Lines DAL.N to answer questions about whether it will use generative artificial intelligence to help set ticket prices.

Lawmakers have raised concerns that airlines could use AI, personal data or consumers' internet usage - for example, visiting a funeral home website - to pinpoint when people most want to travel, and subsequently hike air fares or other prices. Delta has said "there is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise."