State Senate Debates Bill Banning Retailers
Surveillance Pricing Fight: State Senate Debates Bill Banning Retailers From Using AI to Set Prices Based on a Buyer’s Profile
Antonio Ray Harvey | California Black Media
Surveillance pricing—the algorithmic practice of using personal data to determine individualized costs for goods and services—is widespread in California, according to Assemblymember Chris Ward (D-San Diego). He warns that this system is actively impacting consumers across the state, and Black Californians could be specifically targeted.
Ward’s Assembly Bill (AB) 2564, the Surveillance Pricing Act, aims to prohibit businesses from using this practice.
“Surveillance pricing is a growing phenomenon that a lot of people don’t realize is already happening,” Ward told California Black Media (CBM) at the State Capitol on June 29. “This has been going on for several years where large corporations are getting your information from cell phones, home computers, and basically, those data points about who you are as an individual.”
Ward aims to ban this practice, which is already widely used by large retailers, grocers, and service providers.
On June 22, the bill passed out of the Senate Privacy, Digital Technologies, and Consumer Protection Committee with a 5-2 vote and was re-referred to the Committee on Judiciary for consideration. On May 27, the Assembly voted to advance AB 2564 with a 42-21 vote.
Currently, there is no precise public data quantifying how many Black residents in California are actively affected by surveillance pricing. However, because the practice leans heavily on ZIP codes and localized demographic tracking, algorithmic pricing models frequently result in higher costs for Black and non-white communities compared to others, according to the Electronic Frontier Foundation (EFF), a leading nonprofit organization defending civil liberties in the digital space.
“I want to make sure everyone is treated equally. Just because you live in a community that may have fewer resources or options to shop doesn’t mean that you have to be paying higher prices because you’re held captive,” Ward said. “They know this about you, and they can hold you captive. That’s where we hold corporations accountable.”
Justin Brookman, a public-interest lawyer, supports AB 2564. His organization is an official sponsor of the bill. He advocates on behalf of Consumer Reports, where he serves as the director of Technology Policy.
“We found that people shopping for the exact same item at the exact same time, and the exact same store, were getting different prices. In some cases, up to 23% higher,” Brookman said. “So, one person looking at a jar of Skippy peanut butter, it was $2.99. Another person, same exact time, it was $3.69. Over time, those sorts of variations add up.”
AB 2564 is primarily opposed by a coalition of corporations and technology industry associations. They argue that the bill’s language is overly broad, outlaws common consumer-friendly discounts, and creates costly litigation risks for small businesses.
Chamber of Progress – a tech industry association that lobbies for public policies that expand digital commerce and technological advances – says that banning data-driven personalization would wipe away targeted digital coupons that families count on to prolong their budgets.
In a March 18 written letter to the Assembly Committee on Privacy and Consumer Protection, Robert Singleton, senior director of Policy and Public Affairs for California and the U.S. West at the Chamber of Progress, urged the body to oppose AB 2564.
“We share the legislature’s concern about affordability,” Singleton wrote. “The cost of living is the top issue facing American families, and we understand the impulse to ensure consumers are getting a fair deal. But this bill risks backfiring on the families it aims to help.”
While proponents argue the bill protects consumers from predatory pricing, Assemblymember Diane Dixon (R-Newport Beach) argues that AB 2564 creates an anti-business environment.
Dixon, who serves on the Assembly Privacy and Consumer Protection Committee, contends that the legislation will expose California businesses to a bombardment of costly class-action lawsuits, causing companies to exit the state.
“It’s mind-boggling. I mean, this is just giving more attorneys the right to have class-action lawsuits against businesses in California, one after another,” Dixon said. “That’s what we sit here and look at day after day. And this is why business leaves California.”
Ward said AB 2564 is not a bill that is meant to “engender a whole barrage of lawsuits” that will target potential small businesses.
Assemblymember Lori Wilson (D-Suisun City) supported and voted in favor of the bill in the Assembly on May 27, but she still has questions about a “litigation risk” that could be costly.
“Every business or retailer that is spending their time battling courts are spending resources which drives the cost up for everyone,”
said Wilson, a member of the California Legislative Black Caucus (CLBC).
Other states, including Arizona, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Massachusetts, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas, and Vermont, have considered similar legislation, Ward told CBM.
Ward says he would rather the Federal Trade Commission (FTC) take up the fight, but vows to hold the line because he does not expect it to.
Ward says the Trump Administration has refrained from aggressive federal oversight ofartificial intelligence (AI). The agency has also backed away from the previous administration’s efforts to regulate or investigate the practice.
“At some point, you have to stand up for the people and say, ‘enough is enough,’” he said.
