Investigating Surveillance Pricing
A lawmaker on the House Energy and Commerce Committee has launched an inquiry into whether more than two dozen food retailers are using surveillance pricing to charge certain customers more based on their personal data.
Committee ranking member Frank Pallone, Jr. (D-NJ) sent a letter to 25 retailers, including Albertsons, Stop and Shop, Amazon, Whole Foods, CVS, Target, Walgreens, Walmart, and Wegmans, asking about how they collect personal data and whether and how they use it to set prices.
Concerns Over Consumer Manipulation
According to the letter, consumers deserve to know if businesses are using their personal information to manipulate the prices they pay or experiment with algorithms to set the prices they see. The letter notes that many companies appear to be relying on technological advances to maximize profit at the expense of consumers who are already stretched thin financially.
In November, New York state began requiring companies to disclose if they are using AI to set prices based on personal data. Pallone’s letter notes that after the law took effect, Target began posting a pop-up saying that a given price was “set by an algorithm using your personal data.”
Request for Transparency
Pallone asked each of the 25 companies to report back on all of the customer data “elements” they use to set prices and how the data is used to inform pricing. The companies must also explain whether they use AI or machine learning algorithms to determine pricing, whether they obtain data from third parties as they determine what to charge, and if they allow customers to opt-out from having their data used to set prices.
In January 2025, the Federal Trade Commission (FTC) published a report that said businesses charge customers more for products “based on insights gleaned from their consumer data and behaviors — including geolocation, demographics, shopping habits or even how an individual moves their mouse on a webpage.”
The report drew from responses six major companies sent to the FTC in response to an inquiry about surveillance pricing tools. The firms targeted by the FTC all sell products that industry can use to change pricing in real time with the help of an algorithm tailored to account for individual traits determined by personal data.
Background and Context
The issue of surveillance pricing has gained significant attention in recent years, with many consumers unaware that their data is being used to set variable prices. This trend is particularly pervasive for online shoppers, who may be charged different prices based on their browsing history, location, and other personal data.
The use of AI and machine learning algorithms to determine pricing has raised concerns about consumer manipulation and the potential for price discrimination. As the inquiry into surveillance pricing continues, it remains to be seen how the 25 retailers will respond to Pallone’s request for transparency and what steps will be taken to protect consumers from unfair pricing practices.
The investigation into surveillance pricing is an important step towards ensuring that consumers are treated fairly and that businesses are transparent about their pricing practices. As the use of personal data to set prices becomes more widespread, it is essential that consumers are aware of how their data is being used and that they have the option to opt-out from having their data used to set prices.
Conclusion
In conclusion, the inquiry into surveillance pricing launched by the House Energy and Commerce Committee is a significant step towards protecting consumers from unfair pricing practices. The use of personal data to set prices is a complex issue that requires transparency and accountability from businesses. As the investigation continues, it is essential that consumers are aware of how their data is being used and that they have the option to opt-out from having their data used to set prices.
Source: The Record