California Assembly Passes Bill to Ban ‘Surveillance Pricing’

The bill would ban the practice of companies charging different prices based on customer profiles. It would be the first in the nation if enacted.

Customers wait in line to check out at a Costco store in Novato, Calif., on Dec. 11, 2024. Justin Sullivan/Getty Images

A bill to prohibit “surveillance pricing,” used by some companies to charge consumers differently, passed the California Assembly on May 12.

Assembly Bill 446, authored by San Diego Democrat Assemblyman Christopher Ward, would become the first in the nation to ban companies from charging people different prices for the same product based on their personal data.

“I believe that this is predatory, it’s discriminatory, and it violates a public trust when consumers are already stretched thin and don’t deserve to be unwittingly exploited,” Ward told Assembly members during a floor vote on the bill on Monday.

Companies use consumers’ cell phone data, zip codes, home computer IP addresses, and personal information—including facial recognition—to adjust prices, according to the lawmaker.

In a May 7 Assembly analysis, legislative staff cited a 2021 study from George Washington University that found Uber and Lyft charged higher prices on average for pickups and drop-offs in non-white neighborhoods or neighborhoods with lower incomes.

Target was also found to have used an algorithm in 2022 to adjust the price of a TV once a customer entered the parking lot.

“Ensuring fairness in pricing prevents a new form of digital exploitation,” Ward said.

Similar bills are under consideration in New York, Georgia, and Colorado to prohibit the practice.

Electronic shelving labels, facial recognition, and the massive amount of consumer data that exists on the internet have made it easier for companies to use surveillance pricing, according to the lawmaker.

“We have in California some of the strongest privacy laws in the country to give consumers control over your data, but this emerging practice appears to exist through loopholes,” Ward said.

Democrat Assemblywoman Rebecca Bauer-Kahan, of Orinda, supported the bill on Monday, saying surveillance pricing influences California’s cost of living.

“Now, with your phone or your tracking, they can know if you’re a single mom who desperately needs diapers, so they’re going to charge you twice as much for those diapers as someone who maybe isn’t as desperate for that good,” Kahan said. “And that, my friends, is part of what is causing an affordability crisis in California.”

The bill was passed by the Assembly on a 47–20 vote on Monday, with 12 members electing not to vote.

Lawmakers in the California Assembly consider Assembly Bill 1840 at the Capitol in Sacramento, Calif., on Aug. 28, 2024. Travis Gillmore/The Epoch Times

Assemblymen Avelino Valencia of Anaheim and James Ramos of San Bernardino, both Democrats, voted with Republicans against the bill.

The lawmakers who voted against the bill did not comment about their reasons on the Assembly floor on Monday.

A coalition of industry groups led by the Chamber of Commerce argued against the bill, saying that they did not support the practice of surveillance pricing but were concerned that the bill would place civil penalties on other practices, such as membership rewards programs and local discounts, because of its broad language.

The measure’s “broad definition of surveillance pricing prohibits not just cost increases but also any discounts offered to consumers based on any aggregate or personal data,” the industry coalition said in its submissions about the bill.

The measure was co-sponsored by the United Food and Commercial Workers International Union (UFCW).

“It’s crucial that we protect consumers and workers from overreach through the use of technology,” Mark Ramos, president of the UFCW Western State Council and UFCW Local 1428, said in a statement on Tuesday on the bill’s passing.

“Companies have used technology for decades to maximize profits at the expense of consumers, and with the introduction of tools like digital shelf tags and facial recognition, prices could change minute to minute. Customers deserve to be charged the same price for the same product, and with this vote, the Assembly agreed. UFCW is proud to sponsor AB 446.”

The bill now heads to the California Senate, where it will be considered first in committee.