As Walmart Denies Accusations of Predatory Tactics, Watchdog Reveals Patents for Price-Gouging Tech
"Walmart has amassed the most intimate information about its customers and is developing the technology that can be used to put that data to work at checkout," said Lindsay Owens of Groundwork Collaborative.
As Walmart attempted to debunk research into its pricing practices by watchdog group Groundwork Collaborative on Monday, the organization released a new report detailing more than a dozen patents the $833 billion corporation holds or has applied for—all aimed at monitoring customers' behavior to determine what products to market to them, deceiving them about an item's price, and upcharging them.
“Corporations don’t spend years building high-tech pricing tools, hiring experts, and filing patents just to let them collect dust. They do it because they see a path to higher profit—one that runs right through everyday consumers’ budgets," said Lindsay Owens, president and CEO of Groundwork and the author of the book Gouged: The End of a Fair Price—And What That Means for Your Wallet.
On Monday, Owens and Elizabeth Pancotti, Groundwork's vice president of policy, advocacy, and research, released “The Walmart Watchtower: Patents Speak Louder Than Pledges,” noting that Walmart CEO John Furner just recently attempted to do damage control on Owens' reporting in Gouged regarding the company's artificial intelligence-enabled pricing tactics.
While Walmart executives have "openly touted" the ability of "Sparky," the AI shopping assistant the company launched last year, to push customers to spend an average of 40% more during a shopping trip, Furner insisted last month that Walmart will "price the product, not the person.”
But Groundwork said that beyond its deployment of Sparky, "Walmart’s own investments and patents suggest that the retail giant is building a vast arsenal of tools that can be used to track shoppers and even potentially determine what they pay."
The report reveals that technology patented by Walmart can:
- Estimate a child's age through past purchases and steer families toward certain products and price points as they grow;
- Run pricing experiments on shoppers to determine how much they are willing to pay, by pushing prices higher and higher over a period of time;
- Withhold coupons from customers the store believes will be willing to pay full price;
- Change prices of items based on what is already in a customer's cart; and
- Set the price a customer sees in search results on Walmart's website based on their purchase history, where they live, and other identifying characteristics, with one customer being charged $90 while another sees a $110 price tag.
The company has also filed applications for technology that could:
- Use facial recognition, in-store cameras, Wi-Fi signals, and heart-rate or glucose data to measure how shoppers react to any given product;
- Monitor customers' social media activity to determine whether they should be offered a coupon or be expected to pay full price; and
- Monitor customers' daily routines, including kids' sports practices, exercise classes, work, and visits to friends and relatives.
"Walmart has amassed the most intimate information about its customers and is developing the technology that can be used to put that data to work at checkout," said Owens. "Shoppers will have to decide whether to believe Walmart’s patent applications or its PR statements.”
As the report was released, Dan Bartlett, Walmart's executive vice president of corporate affairs, released a public letter accusing Owens of "mischaracterizations" regarding the company's pricing practices.
"Walmart does not and will not use an individual customer’s personal information, income, shopping history, urgency, or willingness to pay to set an individualized price," said Barlett. "We do not engage in dynamic pricing, raising prices in response to a hot afternoon or an approaching snowstorm, for example."
He also said Groundwork has wrongly taken Walmart's patents "as evidence that we will pursue individualized or dynamic pricing," and said the company has "committed not to."
Although Bartlett denied that the company uses AI to upcharge customers, Walmart US CEO Dave Guggina told investors just last month that “when customers engage with Sparky, their average order value jumps 40%.”
Owens responded to Bartlett's letter by saying that any "confusion around Walmart’s pricing practices is of its own making."
"Walmart says one thing in its damage-control letters to customers, another to its investors behind closed doors, and a different thing entirely to the United States Patent and Trademark Office," said Owens.
She called on Walmart to publicly release information about "what data Sparky can see, how that information shapes the recommendations and purchases it makes, and whether sensitive consumer information could be exposed, misused, or used against shoppers," especially considering recent hacking incidents by AI models.
"The arsenal of technologies the company is building that can be used to profile and track us should worry every American who is concerned about their privacy and pocketbooks," Owens said. "This personal data, according to Walmart’s own patents, is a critical element of the new pricing strategies the company is developing."
The report on Walmart's patents released by Groundwork on Monday, said Owens, will allow Americans to "decide for themselves" whether to believe executives' denials.
