Arizona senator targets AI ‘surveillance pricing’ with bill to end online price gouging

Artificial intelligence is making it increasingly easy for companies to track and target consumers, causing price discrepancies among online services. The practice is commonly referred to as “surveillance pricing.” 

In the first bill to ban surveillance pricing, Sen. Ruben Gallego (D-Ariz.) seeks to prevent companies from using customers’ personal data to set variable prices for different people.

Using artificial intelligence, corporations have been compiling personal data like a consumer’s location, the type of device they are using to shop, and even their mouse movements on a website to charge different amounts to people for the same products—creating individualized prices for different consumers. 

Gallego’s “One Fair Price Act” would ban businesses from the practice of collecting consumers’ personal data in order to price gouge.

“Greedy corporations are compiling Americans’ personal data and using AI to find their ‘pain point’ – the maximum they’re willing to pay. That’s not fair pricing, that’s predatory pricing. My bill puts an end to it,” Gallego said in a press release. 

The bill would also give the Federal Trade Commission (FTC) the right to shut down practices using surveillance technology, and let consumers, as well as state attorneys generals and the FTC, sue directly to enforce the ban. 

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An early January study from the FTC found that retail businesses use the personal data of consumers to set varied prices for products—anything from airlines, to chain restaurants like Starbucks, and grocery delivery apps like Instacart.

An investigation by Consumer Reports found that Instacart is experimenting with AI-driven pricing, and charges different consumers different prices for the same product.

According to the study, almost three quarters of grocery items in the experiment were offered to shoppers at multiple price points on Instacart. The platform offered as many as five different sales prices for the exact same grocery item, in the exact same store, at the exact same time.

“When you go to the grocery store, you expect to pay the exact same price for milk as the person in line behind you. But imagine if they charged you more for milk because they know you have growing kids at home and that you need it more than the person behind you. You’d be outraged,” Gallego said in a press release. “It may seem far-fetched, but increasingly that’s exactly what’s happening, especially when shopping online.” 

Gallego’s legislation will need to pass the Republican-controlled Congress and gain the signature of President Donald Trump to become law.