Legal Dilemma of Consumer Protection Under an Algorithmic Pricing Regime

Abstract

The emergence of smart technologies has introduced machine learning algorithms with increasingly sophisticated capabilities to predict the categories of goods a particular class of persons may purchase, and, within a determined price range, a development that has threatened the cardinal principles of privacy and pricing equity, thereby posing ethical and legal challenges. The prospect that algorithms could promote efficiency by optimizing markets dwindles in light of the grievous harm consumers suffer from a lack of pre-information and behavioral biases that disproportionately affect identifiable consumer groups. This paper examines the efficiency of current data governance and consumer privacy regulations, highlighting the need to balance regulation with the progressive social values of artificial intelligence (AI) technologies by evolving algorithm-centered approaches. It adopts the doctrinal methodology of juridical research to analyze primary and secondary source materials. It is demonstrated that most pricing algorithms discreetly violate the GDPR applicable in Europe and its legislative transpositions, including the Nigerian Data Protection Act (NDPA), which primarily protects consumers’ rights in the European Community and Nigeria, respectively. It proposes the following solutions, among others: i) the liberalization of policing algorithms and other monitoring tools to enable users and civil society to track breaches of consumers’ rights and extant laws effectively; ii) synergy among regulatory agencies across sovereign borders; iii) Adoption of China’s cutting-edge policy unmasking the black box for proper interpretation of the AI decision-making process. These measures would streamline the battlefield by precisely defining the limits of AI’s intervention in market forces and consumers’ liberties.