OTTAWA — As the Carney government signals a crackdown on surveillance pricing, major retailers are lobbying for weaker guardrails they argue are necessary for data-based personalized discounts.
But critics argue that’s a talking point used to justify a “creepy” business practice that violates people’s privacy and discriminates against the consumers who ultimately pay a higher price.
Digital retail delivery giant Instacart, already under scrutiny in the U.S., has registered to lobby the Canadian government on the “regulation of artificial intelligence, including algorithmic pricing practices.”
An Instacart spokesperson told the Star the company wants to “educate the federal government on the most effective way to ban surveillance pricing without putting at risk many common, everyday affordability measures consumers care about.”
In its long-awaited artificial intelligence strategy released Thursday, the Carney government said it will “strengthen its privacy laws to ensure that Canadians’ personal information is not used inappropriately, including for surveillance pricing.” Government officials did not give further details or clarify when asked if that will be an outright ban on the practice.
Surveillance pricing refers to the personalizing of prices for individual consumers based on their data, including search histories and past purchases.
The practice has been under heavy scrutiny by American regulators and lawmakers, including the Federal Trade Commission. Canada’s Competition Bureau has also noted that more than 60 companies in the country “offer services that use algorithms and that claim to help companies optimize pricing.”
Like Instacart, the Retail Council of Canada has said it welcomes a ban on surveillance pricing only if there are exceptions to allow businesses to use personal data for targeted discounts.
But that’s a cop-out that could allow retailers to set “fake price ceilings,” infringe on people’s privacy and discriminate against those who won’t get the targeted discounts, said Vass Bednar, managing director of the think tank The Canadian Shield Institute.
“Setting a discount is setting a price, right? It’s just the only difference is that a price ceiling has been set, that’s all,” Bednar told the Star.
On the contrary, Bednar said a discount program for seniors, for example, would be “flat and stable and advertised.”
“Everybody over 65 gets the same discount. You don’t need data to do that. You don’t need to surveil anyone. The person is not surveilled, they can present their ID at the checkout on Shoppers Drug Mart on Tuesday and prove that they’re over 65,” Bednar said.
NDP Leader Avi Lewis, who has pushed for a ban on surveillance pricing in Canada, said an exception for discounts is “very slippery.”
“If I’m getting charged $599 for a flight and you’re getting charged $799 for the same flight, am I getting a discount or are you getting ripped off?” he said.
Instacart’s lobbying on the issue is a red flag, Lewis added.
That’s because the company was under fire in the U.S. last year after an investigation by Consumer Reports found that Instacart was using AI to offer groups of shoppers different prices for the same products.
Instacart, in response, said it would end the “price tests” it was running and display identical prices for all consumers, but insisted no surveillance pricing was used and the experiment was randomized.
“These are sneaky, creepy business practices that don’t get regulated precisely because of big business access to government through the power of lobbying,” Lewis told the Star.
Debate over how to tackle surveillance pricing comes as affordability remains a top political concern in Canada.
Prime Minister Mark Carney and Finance Minister François-Philippe Champagne went before cameras Friday to plug the payout of one-time top ups to the GST/HST credit that about 12 million Canadians will receive, which they’ve rebranded as the Canada Groceries and Essentials Benefit.
Pressed by reporters about what more Ottawa can do to address high food costs, Champagne said Canadians’ cost of living worries are a political priority.
Asked if the government would support publicly run grocery stores as a way to keep costs down — as the NDP has proposed — Champagne said he believes the better option is to promote more competition throughout the food supply chain, as the Liberals have promised.
“We’ve done our part,” by giving more power to the federal competition watchdog and helping to boost agricultural production, he said.
With files from Tonda MacCharles
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