California Moves to Ban AI-Driven Personalized Pricing Based on Consumer Data
California surveillance pricing ban legislation is moving closer to becoming law, potentially making the state the first in the nation to broadly prohibit retailers from using consumers’ personal data to set individualized prices.
Assembly Bill 2564 (AB 2564), known as the Surveillance Pricing Prohibition Act, has cleared the California Assembly and is awaiting a vote on the Senate floor. If approved by the Senate and signed by Gov. Gavin Newsom, the measure would take effect immediately.
The proposal would apply to grocery stores, brick-and-mortar retailers, and e-commerce platforms across California.
What Is Surveillance Pricing?
Surveillance pricing refers to the practice of analyzing a shopper’s personal information to determine how much they are likely willing to pay for the same product.
Retailers can use data such as age, gender, web browsing history, real-time location, estimated income, household size, health information, and app activity to generate personalized prices.
For example, a consumer living in an affluent neighborhood or identified as more likely to make a purchase could be shown a higher price than another shopper buying the exact same product.
Consumers also voiced concerns about the practice. Junki Lee, 26, said AI-driven pricing raises significant privacy issues because companies collect and analyze vast amounts of personal information. “If people have to pay different prices for the exact same product based on their shopping habits, it inevitably feels unfair from a consumer’s perspective,” he said.
The bill would also restrict personalized discounts that are offered only to specific consumers based on data collected through AI or other digital technologies.
Lawmakers Say Practice Is Unfair
Supporters of the California surveillance pricing ban argue that consumers should not pay different prices simply because companies have collected detailed information about them.
Assemblymember Chris Ward, who authored AB 2564, said no one should have to pay more because of their personal data.
He added that surveillance pricing disproportionately harms lower-income shoppers and consumers with fewer retail options.
The issue gained attention earlier this year after reports that ride-hailing services charged dramatically different fares for identical trips. Consumer Reports found that pri
ces for the same route could range from $25 to $65, depending on factors including user demand and travel patterns.
Retail Industry Warns of Unintended Consequences
Business groups argue the legislation could unintentionally limit legitimate savings programs.
The California Retailers Association said millions of Californians rely on sales, digital coupons, and loyalty programs to reduce grocery and household expenses.
The association contends the bill does not clearly exempt those types of discounts, raising concerns that retailers could scale back customer rewards and promotional pricing.
California Would Have One of the Toughest Laws
Several states—including Maryland, Colorado, Connecticut, and Rhode Island—have already enacted or proposed restrictions on surveillance pricing.
However, those states generally allow certain personalized discounts and loyalty programs to continue.
If enacted, the California surveillance pricing ban would be among the nation’s most comprehensive laws by placing broader limits on AI-powered individualized pricing and personalized discount practices based on consumers’ personal data.
