California lawmakers take on surveillance pricing, joining backlash

from Harry JohnsonCalMatters

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California lawmakers last year abandoned a plan to do something about surveillance pricing, the practice of using someone’s personal information to determine what they pay.

This year — with voters across the country facing rising inflation and an affordability crisis — lawmakers in California and other states are pushing for restrictions.

A proposed ban on surveillance pricing landed a key vote in the California Legislature on Thursday. It would prohibit retailers from changing prices based on information about shoppers such as their age, gender or location.

Algorithms used for surveillance pricing can predict things like whether a buyer is desperate to buy or how much money they have. The data they use is based on personal information collected through applications, web browsing history and data brokers.

Attorney General Rob Bonta opened investigation into pricing practices to monitor business in January but has not posted results or commented on this.

“This practice hits low-income people the hardest.”

Rep. Chris Ward, D-San Diego

The legislation that advanced Assembly Bill 2564is one of about a dozen AI-related bills, and hundreds in total, that face the possibility of being eliminated as the Legislature’s appropriations committees decide whether or not to order them on hold, a practice that effectively killed 25% of all accounts for consideration this year. The bill still needs to be approved by the full Assembly and Senate to reach Gov. Gavin Newsom’s desk this fall.

“The last thing anyone needs is to be charged higher prices based on their personal information,” the bill’s author, San Diego Democratic Assemblyman Chris Ward, said at a briefing in March. “This practice hits low-income people and shoppers the hardest, as well as those with limited shopping options.”

Approximately half of American states this year are considering bills to regulate the ways in which companies offer multiple prices for a single good. In the last month alone, three states have passed bills to ban surveillance pricing. In Maryland, Gov. Wes Moore signed a law banning it monitoring food pricesand in recent days, lawmakers in Colorado and Connecticut passed their own bans on surveillance pricing.

California lawmakers last year backed away from a similar account to prohibit surveillance pricing. It didn’t make it to Newsom’s desk.

This year, the pressure to act on surveillance pricing is mounting as voters across the country cite affordability as a top concern ahead of this fall’s midterm elections.

Inflation rose to 3.8% this week, outpacing wage gainsand gas prices continued to rise, food productsand other goods. A Gallup poll released two weeks ago found that 55 percent of Americans say their financial situation is getting worse, a record high since the polling company began asking Americans about it in 2001. The recent wave of state surveillance pricing bans is significant since no states passed such bans last year, said Grace Geddy, a policy analyst for Consumer Reports who tracks efforts to regulate surveillance pricing by of state governments. Consumer Reports co-sponsored AB 2564 and has partners with The Markup, part of CalMatters, for project reporting.

It is not clear how widespread surveillance pricing is today, but numerous examples of the practice have come to light.

A 2025 FTC Study found that surveillance pricing can lead to the targeted exploitation of consumers who are willing to pay higher costs, such as first-time parents or first-time car buyers, and that the practice can lead to inferences about what price a person is willing to pay based on their location or IP address.

And 2024 White House Survey estimates that price-fixing algorithms will cost apartment renters $3.8 billion in 2023, amounting to higher rents across the countryincluding $99 more per month in San Diego, $62 more per month in San Francisco and $34 more per month in Los Angeles.

A December 2025 Instacart Investigation by Consumer Reports and partners found that the company charged hundreds of people, including at least 53 who live in California, different prices even if they shopped for groceries at the same store at the same time. Two weeks later, Instacart announced plans to end the experimental practice and the attorneys general in California and New York launched investigations.

Other prominent examples:

• Target paid $5 million to settle a lawsuit by the San Diego County District Attorney regarding the alleged use of a surveillance pricing location.
• A 2025 investigation by SFGATE found that Bay Area residents are being charged more for hotel rooms by websites like booking.com than people in less affluent areas, including $500 more per night for a hotel room in Manhattan.

Gedye argues that the surveillance pricing ban is necessary because it is unreasonable to burden consumers to protect themselves when they are busy living their lives and buying groceries, and because laws requiring disclosure laws are ineffective.

The California Chamber of Commerce and business groups representing retailers, technology companies and others oppose AB 2564. In a letter, some of them say the bill will prevent stores from offering discounts, is difficult to comply with and will increase costs. The bill allows for discounts for customers who do things like sign up for mailing lists or participate in loyalty programs.

Samuel Levin, who previously served as director of the Federal Trade Commission’s Bureau of Consumer Protection, told a recent UC Berkeley Law School symposium that people should reject the idea that surveillance pricing is inevitable.

“Worried about algorithmic wages? Set a minimum wage. Worried about algorithmic pricing? Ban it. Worried about algorithmic scheduling? Ban it,” he said.

Christopher D’Angelo, who previously worked at the Consumer Financial Protection Bureau and now works for the New York attorney general, said his office supports a bill in the state legislature that prohibition of surveillance pricing and electronic grocery store shelf labels. New York state passed a law last year that requires companies to disclose to consumers when they use surveillance pricing, but “because of the fact that we support a ban on surveillance pricing, we see that this is not a solved problem.”

Eleanor Blum, special assistant attorney general at the California Department of Justice, said the affordability crisis is prompting action. She said a new law banning algorithmic pricing may be needed, but the state can influence how businesses use the technology by clarifying when her office will take action based on existing antitrust, privacy or unfair competition laws. Blume said the AG’s office looked into New York’s surveillance pricing law before launching its investigation in January and continues to discuss issues related to the privacy law with state officials in Colorado.

“I think we’re at a point now where states are able to do phenomenal work that can have effective outcomes for people,” she said.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.