This story was originally published by CalMatters.
Last year, California lawmakers backed off on 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 in other states are cracking down.
A proposed surveillance pricing ban cleared a key vote in the California Legislature Thursday. It would forbid retailers from altering prices based on information about shoppers like their age, gender, or location.
Algorithms used for surveillance pricing can predict things like whether a shopper is desperate to buy or how much money they have. The data they use draws on personal information gathered through apps, web browsing history, and data brokers.
Attorney General Rob Bonta opened an investigation into surveillance pricing by businesses in January but has not released results or commented on it.
The legislation that moved forward, Assembly Bill 2564, is one of more than a dozen AI-related bills, and hundreds of bills in total, that faced the possibility of elimination as the Legislature’s appropriations committees decided whether to hold them, a practice that effectively killed 25% of all bills up for consideration this year. The bill still needs to clear the full Assembly and Senate in order to make it to the desk of Gov. Gavin Newsom this fall.
“The last thing anyone needs is to be charged higher prices based on their personal data,” said the bill’s author, San Diego Democratic Assemblymember Chris Ward, in a March briefing. “This practice hits hardest for low-income individuals and shoppers and those with limited shopping options.”
Roughly half of U.S. states this year are considering bills to regulate the ways companies offer multiple prices for a single good. In the past month alone, three states passed bills to ban surveillance pricing. In Maryland, Gov. Wes Moore signed a law that bans using the practice to price groceries, and in recent days lawmakers in Colorado and Connecticut passed their own surveillance pricing bans.
California lawmakers last year backed off on a similar bill to ban surveillance pricing. It did not reach Newsom’s desk.
This year, pressure to act on surveillance pricing is building as voters across the country cite affordability as a top concern ahead of midterm elections this fall.
Last week, inflation rose to 3.8%, outpacing wage gains, and prices continued to rise for gas, groceries, and other goods. A Gallup poll released two weeks ago found that 55% of Americans say their financial situation is getting worse, a record high since the polling company began asking Americans about that in 2001.
The recent spate of state surveillance pricing bans is significant after no states passed any such bans last year, said Grace Gedye, a policy analyst for Consumer Reports who tracks efforts to regulate surveillance pricing by state governments. Consumer Reports is a cosponsor of AB 2564 and has partnered with The Markup, a part of CalMatters, on reporting projects.
It’s unclear just how widespread surveillance pricing is today but numerous examples of the practice have come to light.
A 2025 Federal Trade Commission study found that surveillance pricing can lead to targeted exploitation of consumers who are willing to pay higher costs like 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.
A 2024 White House study estimated that price-fixing algorithms cost apartment renters $3.8 billion in 2023, amounting to higher rents nationwide, including $99 more a month in San Diego, $62 more a month in San Francisco, and $34 a month more 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 lived in California, different prices even if they were shopping for groceries in the same store at the same time. Two weeks later, Instacartannounced plans to stop the experimental practice and attorneys general in California and New York launched investigations.
Other prominent examples:
Gedye argues that a surveillance pricing ban is necessary because it’s unreasonable to place the onus on consumers to protect themselves when they’re busy trying to live their lives and buy groceries, and because laws that require disclosure laws are ineffective.
The California Chamber of Commerces and business groups representing retailers, tech companies, and others oppose AB 2564. In a letter, some of them argue that the bill would keep stores from offering discounts, is complicated to comply with, and would drive up costs. The bill allows discounts for customers who do things like sign up for mailing lists or participate in loyalty programs.
Samuel Levine, who previously served as director of the Federal Trade Commission’s Bureau of Consumer Protection, said at a recent UC Berkeley School of Law symposium that people must 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 would ban surveillance pricing and electronic shelf labels in grocery stores. The state of New York passed a law last year that requires companies disclose to consumers when they use surveillance pricing, but “by virtue of the fact that we’re supporting a ban on surveillance pricing we can see it’s not a solved problem.”
Eleanor Blume, special assistant attorney general in the California Department of Justice, said the affordability crisis is driving an urgency to act. She said it may be that a new law that bans algorithmic pricing is 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 surveillance pricing law before launching its January investigation and continues to discuss privacy law related issues with state officials in Colorado.
“I think we’re at a moment now where states are able to do phenomenal work that can have effective outcomes for people,” she said.