What is Surveillance Pricing?

Surveillance pricing, also known as personalized pricing or personalized algorithmic pricing, is the use of individuals’ personal data to charge different consumers unique prices. It is a form of price discrimination, which means charging different consumers varying prices for the same good, according to what the business thinks each consumer is willing to pay. Advancements in technology are making it cheaper and easier for businesses to identify personal characteristics. Social media and cookies (files that track users’ browsing history) make it easy to track interests and preferences; IP addresses can be used to approximate an individual’s location; and the items in someone’s cart can be used to infer demographic information. This data is then used to offer personalized prices.

Surveillance pricing is known to be widespread. From July 2024 to January 2025, the Federal Trade Commission (FTC) conducted an investigation into surveillance pricing, publishing a 6(b) interim paper in 2024 about its findings. In this paper, the FTC found that at least 250 of the businesses investigated were engaging in some form of surveillance pricing. Multiple respondents reported profit margin increases of 1–4%. The agency’s investigation stalled once the Trump administration came into office.

Surveillance pricing is also unpopular with consumers. A 2025 Talker Research Survey found that 62% of Americans were concerned about surveillance pricing, and 37% viewed it as less fair than a fixed price. Some economists predict that consumers’ aversion to surveillance pricing may lead businesses to avoid the practice. There was public backlash on the following instances where businesses were engaging in surveillance pricing:

• Uber was found on multiple occasions to be seemingly using information about the battery life on consumers’ phones to charge different prices for identical rides. Uber denied this, but is being investigated by U.S. lawmakers. 
• The Princeton Review was found in 2015 to charge different prices based on customers’ ZIP codes. Customers living in areas with higher median incomes and higher Asian populations were charged more. While Princeton Review denied deliberate racial discrimination, their pricing strategy still disproportionately targeted Asian customers.
• Instacart’s CEO said that AI-based pricing algorithms would allow Instacart to understand which products their customers were more price sensitive on and set prices accordingly. In 2025, an investigation on 437 shoppers found that totals varied by an average of 7% for identical purchases. In response to public backlash, Instacart cancelled its surveillance pricing pilot.
  

How Have States Approached Surveillance Pricing?

In response to concerns about inflation and affordability, policymakers in California, Colorado, Georgia, New York, and Illinois tried to pass bills on surveillance pricing in 2025. Except for New York’s 2025 Algorithmic Pricing Disclosure Act, all of these initial efforts failed. 

One of those 2025 bills was California’s A.B. 446. It imposed strict prohibitions on surveillance pricing, drew strong industry pushback, was narrowed in scope, and ultimately failed to pass. Assemblymember Chris Ward, who sponsored A.B. 446, introduced A.B. 2564 this session in a renewed effort to pass a bill on surveillance pricing. 

From the executive branch, the California Department of Justice began an investigatory sweep into surveillance pricing in January 2026. Their goal is to zero in on compliance issues, and past sweeps have resulted in settlements after the state identified violations of California law.

What Would A.B. 2564 Do About Surveillance Pricing?

As it stands, the bill would prohibit Californian retailers from engaging in surveillance pricing. In addition to responsibility for attorney’s fees, violators would be charged a civil penalty of up to $12,500 per violation. Intentional violators could pay up to three times the civil penalty. However, there is a limited right to private action; this would let litigants claim an injunction, but not monetary compensation.

The bill would exempt differential pricing which reflects actual differences in the costs of serving different customers. It also exempts discounts based on publicly disclosed eligibility criteria (e.g. signing up for a mailing list), membership in a broadly defined group (e.g. teachers, veterans), and loyalty programs.

How Does A.B. 2564 Build on Previous Law?

In 2018, California passed the California Consumer Privacy Act (CCPA), which was amended two years later by the California Privacy Rights Act (CPRA). The CCPA, as amended, grants California consumers privacy rights which include:

• The right to know how a business collects, uses, and shares their personal data
• The right to have collected personal information deleted (with some exceptions)
• The right to opt out of the selling or sharing of personal data
• The right to exercise CCPA rights without fear of retaliation
• The right to correct a business on inaccurate personal data
• The right to restrict how a business uses or discloses their sensitive personal data

The sponsors of A.B. 2564 see their bill as a way to strengthen the privacy protections of the CCPA to include protection from surveillance pricing. A.B. 2564 has a limited right to private action and a smaller impacted population (“retailers”) than the initial text of A.B. 446, which targeted “any persons” and allowed plaintiffs to sue for monetary damages.

Why Do Proponents Support A.B. 2564?

Proponents of A.B. 2564 say surveillance pricing harms consumer welfare. Experts with the American Economic Liberties Project argue that when consumers cannot consistently compare prices, it is harder for them to ascertain what a fair price is for a given product. This also makes it more difficult to hold companies accountable for practices like price gouging. 

Surveillance pricing may also protect larger businesses, which is anticompetitive. A competitive market is thought to enhance consumer welfare by driving prices down. However, if consumers are charged different prices for the same goods, they may settle for the price and business they see first. This lowers the pressure that might allow more, smaller businesses to compete. Furthermore, effective surveillance pricing requires large amounts of data, which is increasingly expensive. This puts smaller businesses with fewer resources at a disadvantage. 

Finally, surveillance pricing has negative implications for consumers’ privacy. Though California consumers are protected by the CCPA, the use of their personal data can be extremely lucrative and may incentivize intrusive data collection anyways. Apart from using consumers’ information for product pricing, businesses could also sell it to third parties. Even if specific data points are not shared, businesses may be able to infer more about consumers than they would like. 

Why Do Opponents Critique A.B. 2564?

The main argument against A.B. 2564 is that surveillance pricing is mostly used to give people deals, not set higher prices. Examples include personalized coupons, win-back coupons, abandoned cart coupons, and new product coupons. Retailers may not offer promotions if they cannot target individual consumers, as they would have to uniformly lower prices for consumers across each transaction. By disallowing individualized coupons, A.B. 2564 could harm lower-income consumers who are more dependent on discounts; these consumers might be priced out of the market.

Opponents also claim that A.B. 2564 creates an unfair amount of liability for retailers, which harms consumers. Retailers may purchase consumer data from third parties with the intent of operating loyalty programs that abide by A.B. 2564. However, if the data was gathered via electronic surveillance technology, the retailers could be held liable, even if they are not aware of the data collection practices. The civil penalty of $12,500 per violation would negatively impact wrongfully charged retailers. In addition, A.B. 2564 would have violators of the act pay the plaintiffs’ attorneys fees, which opponents argue would disadvantage less resourced retailers. 

Finally, some opponents praise A.B. 2564’s goal of cracking down on surveillance pricing, but assert that it is going after the wrong sorts of sellers. They argue that the “perishable or time-specific” nature of service encourages service-based industries to use dynamic or personalized pricing. Research has found that price discrimination in service industries is common due to differing consumer preferences.

Conclusion

While the economic impacts of surveillance pricing are still unclear, some criticize the practice due to its seeming encroachment on fair pricing. Concerns about affordability and cost of living remain high, and state lawmakers are pushing to pass bills restricting surveillance pricing. They have met considerable opposition from industry lobbyists, as shown by A.B. 446’s failure. 

California has long been a leader in tech regulation. The CCPA was the first comprehensive data privacy law in the United States, and other states have since followed in its footsteps. As of 2026, twenty states have comprehensive data privacy laws. Since 2016, California has passed the most AI-related bills of any state. If A.B. 2564 passes without being scaled down, it may serve as a role model for other states.

Frequently Asked Questions