California moves to ban AI-driven surveillance pricing amid consumer privacy concerns
California legislators are pushing a ban on AI-based “surveillance pricing,” which tailors costs using shoppers’ personal data, while some experts argue the practice can sometimes lower prices.
Companies are using AI tools to scan shoppers' personal data—ranging from income and zip code to browsing habits—and set prices on the spot, a method known as surveillance pricing. In response, California's Assembly has advanced Bill 2564, which would outlaw any technology, including AI, that prices items based on individual data, and the measure is set for a final vote before the session closes. Supporters such as Assemblymember Christopher M. Ward argue the practice is inequitable, especially in a high-income state, while economists like Jean-Pierre Dubé point to research indicating personalized pricing can sometimes reduce costs for consumers.
New Jersey has already enacted similar limits, New York is awaiting the governor's signature, and the FTC recently warned firms to disclose such pricing tactics. Prior cases, including a 2022 settlement with Target and investigations of Kroger, illustrate alleged misuse of location-based pricing. The debate pits consumer-privacy advocates against businesses that claim data-driven pricing improves market efficiency.
Why it matters
The outcome will shape how companies can use personal data to set prices, affecting consumer costs and privacy nationwide.
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