Los Angeles, CA—The fight to stop companies from using personal data to raise prices for the same product is on hold as Sen. Chris Ward has withdrawn his bill regulating surveillance pricing (AB 446) after it was gutted in the Senate Appropriations Committee.
“This year was the moment to address the novel and pervasive practice known as surveillance pricing,” said Justin Kloczko, tech and privacy advocate at Consumer Watchdog. “Two people should not be paying different prices for the same product based on the collection of their personal data. Unfortunately, there was a lot of misunderstanding about AB 446 and senate leadership appears to have fallen for it. The amended bill was not ready for primetime.”
After heavy industry opposition, including from retailers and California Chamber of Commerce, the bill was narrowed to only apply to grocery stores using data to raise the prices of goods. The bill originally sought to stop anyone using personal data to set prices and was subsequently amended to exempt groups that typically get discounts like teachers, veterans, senior citizens, and students, or those who sign up for loyalty programs, according to Consumer Watchdog, a California nonprofit. Despite the bill reflecting these exemptions, groups ran paid ads and opinion pieces incorrectly saying the opposite.
The bill was also altered inside the black box that is the Senate Appropriations Committee, one of a few committees in which the public isn’t privy to its process, said Consumer Watchdog.
Because the bill was weakened, Ward became reluctant to advance it.
“Californians deserve real, meaningful protections—not watered-down half measures—and I refuse to accept anything less,” said Ward. “Affordability remains a top priority for me, and I will continue this fight when we reconvene in January.”
“Surveillance pricing has become the norm. This issue won’t go away,” said Kloczko. “It affects everyone and is especially concerning during a time when prices have increased, the data collected on us is incredibly detailed, and corporate algorithms and AI are running wild,” said Kloczko. “This idea that every person has an individual price is a bad one.”
AB 446 was co-sponsored by Consumer Watchdog, Consumer Reports, and the United Food and Commercial Workers Western States Council (UFCW).
Last year, Consumer Watchdog outlined examples of pricing algorithms in a report titled “Surveillance Price Gouging.”
Orbitz deployed a pricing algorithm assuming that Mac users were wealthier than non-Mac users, and charged them more for hotel rooms. The price for a backpack on Amazon was $7 more on a shopper’s phone than on their laptop. The Princeton Review charged customers in ZIP Codes with high Asian populations more for tutoring packages. Consumers browsing from the Bay Area were charged higher rates for hotel rooms than those browsing from Kansas City and Phoenix. And despite Consumer Watchdog requesting identical rides with the same origin and destination, and the same distance and route traveled, one rider was charged $5 more on Lyft than the other person using Lyft. There shouldn’t be a reason for that, and it’s unclear why, said the nonprofit.
“Companies are trying to read people’s minds and anticipate how bad they want a product and how much they are willing to pay for it, based on data such as scrolling habits and geolocation,” said Kloczko.
Bill supporters included the American Economic Liberties Project, California Nurses Association, Consumer Federation of America, EPIC, Consumer Reports, TechEquity, and Privacy Rights Clearinghouse.
The Federal Trade Commission in the final days of the Biden Administrations said surveillance pricing does happen, but the FTC appears to have now bailed on the issue under the Trump FTC, said Consumer Watchdog. View a short Consumer Alert video on surveillance practice here.
