THE LOYALTY PENALTY: WHY YOUR FAITHFUL SHOPPING HABITS ARE COSTING YOU MORE

Keywords

Instacart, Consumer Reports, dynamic pricing, AI, surveillance pricing, Eversight, customer surplus, price discrimination, grocery staples, algorithm ethics

SummaryIn this episode of the Venture Step Podcast, Dalton Anderson dives into a recent Consumer Reports investigation regarding Instacart’s use of AI-enabled dynamic pricing. Dalton explores how the technology, powered by a company called Eversight, aims to reduce "customer surplus" by charging users different prices for the exact same goods based on their willingness to pay. The discussion highlights the ethical concerns of applying airline-style pricing logic to essential items like milk and eggs, the manipulation of discount perception, and the potential for discriminatory profiling against vulnerable populations.

Takeaways

While society generally accepts variable pricing for airline seats due to supply and demand, applying this logic to essential goods like bread and eggs raises significant ethical questions.

A Consumer Reports investigation involving 437 volunteers found that 74% of items selected had different prices for different people in the same geographic areas.

The study revealed massive markups, such as a 23% increase for Wheat Thins in Seattle and a 20% price swing for eggs in DC.

This pricing strategy is driven by "Eversight," which uses AI to determine the maximum price a consumer will pay, effectively eliminating the savings a customer might otherwise enjoy . Additionally, the illusion of deals is created when algorithms artificially inflate the list price for certain users to make a standard discount appear larger. Brand loyalty can also act as a disadvantage; if an algorithm knows you will always buy a specific brand, it may charge you more for it. Ultimately, there are fears this technology could evolve into discriminatory profiling, similar to failed predictive policing models, targeting users based on personal data and location.

Sound Bites"But what if that same logic applied to staple goods like milk, bread, eggs?"

"Your loyalty has a penalty now."

"It's predatory price manipulation of goods, of staple goods that people need on a day-to-day basis."

"Gross, the whole thing is gross."

Chapters00:00 Introduction: Dynamic Pricing in Groceries01:49 From Physical Stickers to Digital Black Boxes03:52 Understanding Eversight and Customer Surplus06:44 The Consumer Reports Investigation Results09:50 The Ethical Cost of AI Pricing11:03 Psychological Manipulation and the Illusion of Deals14:44 The Dangers of Surveillance Pricing and Discrimination18:39 Conclusion: The Need for Pricing Transparency

Support

https://www.consumerreports.org/money/questionable-business-practices/instacart-ai-pricing-experiment-inflating-grocery-bills-a1142182490/