Same items, different prices: What is 'surveillance pricing' that New Jersey is trying to end?
“If the store knows that you just searched for a certain product online, it might charge you a higher price,”
Customers all pay the same prices for the same items at the brick-and-mortar grocery store. But online? Businesses can use AI to charge more based on what they learn from customer data. It’s a practice known as “surveillance pricing.”
“If the store knows that you just searched for a certain product online, it might charge you a higher price,” said Gov. Mikie Sherrill. “That’s outrageous.”
The NJ Senate’s bipartisan Commerce Committee has advanced a bill banning companies from charging different customers different prices based on their data.
“No one who looks at this could possibly argue for not passing this bill,” said Paul Oster, the president of Monmouth County-based Better Qualified. He says travel companies also use AI to set prices, and could charge more to users who search for flights more frequently.
“We played this out and did a little investigative research ourselves,” Oster said. “If a friend of yours - for the first time - searched those same flights and destinations, they would get a different price.”
The House Oversight Committee is asking travel companies like Uber and Expedia for information on their AI pricing models.
As of November, New York businesses that use surveillance pricing must clearly state that they used an algorithm with personal data to set prices. Their legislators are also looking to ban the practice.
A December study from Consumer Reports found that Instacart customers paid different prices for the same items at the same store. The company said it was a random, temporary price test that didn’t use customer data - but Instacart still retired its AI pricing tool after backlash.
Oster says data collection is the main issue.
“Your income, do you own your house, do you rent your house, how many cars do you have?" Oster said. "Stop filling out all those crazy surveys that ask all those questions.”
The best defense is to shop local in-person, where the prices can’t change per customer.
