California legislators take on surveillance pricing, joining backlash

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A bill to ban surveilance pricing cleared a key vote in the California Legislature Thursday. The legislation was sponsored by Assemblymember Christopher Ward. Ward, right, speaks on the floor of the Assembly at the state Capitol in Sacramento on Jan. 22, 2024. Photo by Fred Greaves for CalMatters

In summary

A law advancing in the California Assembly makes it illegal to set prices with algorithms. Three other states have passed such bans in the last month.

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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.

“This practice hits hardest for low-income individuals.”<br>Assemblymember Chris Ward, Democrat, San Diego

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.

More on AI pricing

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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.

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This 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...