Using algorithms to charge different customers different prices for the same products or services is not illegal. We encounter such dynamic pricing every day. Rideshare apps have surge pricing; hotel prices fluctuate nightly, and there are countless other examples of algorithmic pricing based on supply and demand.
However, things get dicey when companies combine algorithmic pricing with troves of personal consumer data, and then use that personal data to set individualized prices. In my opinion, this pernicious practice, called “surveillance pricing,” should be illegal.
Thankfully, certain actions are being taken at the state level. Maryland, Connecticut, and New York have passed surveillance pricing laws, and already in 2026, 40 more bills have been put forth in over 24 different states.
Over the past few months, surveillance pricing has gone from a wonky tech policy issue to a mainstream issue with a lot of cross-partisan appeal. Much of surveillance pricing’s newfound awareness can be traced back to a December 2025 investigation of Instacart.
Instacart investigation
According to an investigation from Consumer Reports and Groundwork Collaborative, Instacart allegedly was conducting “widespread AI-enabled experiments that price identical products differently from one customer to the next, sometimes by as much as 23 percent.” In the wake of the report, Instacart stopped doing these “pricing experiments.”
Lindsey Owens, executive director of Groundwork Collaborative, went on the record, saying, “Once we pulled back the curtain on Instacart’s hidden pricing experiments, the company had no choice but to reverse course. But it shouldn’t take investigative research, public outcry, and the threat of FTC action to convince companies not to treat consumers like lab rats.”
JetBlue’s alleged surveillance pricing practices under scrutiny
By no means are surveillance pricing accusations limited to the tech industry. As a quick example, JetBlue was recently accused of using individual’s internet search histories to charge customers different prices for the same flights.
Responding to a social media post from the New York-based airline, Texas congressman Greg Casar (D-Austin, TX) wrote, “Using people’s personal data to charge them more should be illegal.” In February 2026, Sen. Ruben Gallego (D-Arizona) brought even more awareness to these surveillance pricing accusations, when he formerly asked JetBlue CEO Joanna Geraghty for more information.
A class action lawsuit against JetBlue is making its way through the courts. For his part, Casar put forth a “Stop AI price gouging and wage fixing” bill last July; however, it didn’t gain much traction.
In fact, there hasn’t been any surveillance pricing legislation at all at the federal level. Although an FTC study under Lina Khan did find that a wide range of personal data was, indeed, being used to set individualized consumer prices, the current administration downplayed the findings. Current FTC chair Andrew Ferguson has described the report as “a rush job.”
Given Ferguson’s take, I don’t expect anything to happen at the federal level, but it is heartening to see some action being taken at the state level.
Maryland becomes the first state to pass a ban on surveillance pricing
On April 28, 2026, Maryland Gov. Wes Moore signed the Protection From Predatory Pricing Act into law. Taking effect on October 1, 2026, this law prevents grocery stores, food retailers, and third-party delivery services from setting higher prices based on individual customers’ personal data.
Although anti-surveillance advocates are happy to see an increased focus on surveillance pricing, they lament that Maryland’s law has a bunch of industry carve-outs. Tom McBrien, counsel at the Electronic Privacy Information Center (EPIC), says, “We’re excited Maryland took this step, but we do have serious concerns. The exemptions allow other ways of arriving at the same outcome that are just harder for consumers to detect.”
In addition to providing exemptions for promotional offers and loyalty programs, the Maryland law does not address the reduction of prices. If a grocery store were to raise prices across the board and then offer individual discounts to certain individuals, “suddenly you’ve arrived at the same outcome,” McBrien points out.
Also, the Maryland law has no private right of action; all enforcement comes via the state Attorney General.
Connecticut passes its own law
On June 4, 2026, Connecticut Gov. Ned Lamont signed a surveillance pricing ban into law. Connecticut’s law is significantly stronger than Maryland’s, as it casts a much wider net, covering retail sellers and third-party delivery services. Unlike Maryland’s law, this one isn’t solely limited to food sales.
Additionally, the Connecticut law has a disclosure requirement, which forces retailers that use surveillance pricing to disclose whenever a price has been raised due to a customer’s personal data.
Like Maryland’s law, the Connecticut law doesn’t have a private right of action, and the loophole of raising prices across the board and subsequently offering discounts to certain individuals is not addressed.
The New York state legislature follows suit
Not to be outdone, the New York legislature passed its own surveillance pricing bill on June 4. New York’s One Fair Price Act, which is currently on the desk of Governor Hochul, is much broader than the Maryland bill, and it carries various civil penalties for violating companies. Hochul has until December 31, 2026 to sign this bill.
New York already has a disclosure law in place, which requires companies to disclose whenever they’ve used an algorithm to set a price using customers’ personal data. This law, the Algorithmic Pricing Disclosure Act, has been in effect since November 2025; however, the One Fair Price Act would go much further. If passed in its current form, it would essentially be an outright ban on surveillance pricing. Between now and the end of the year, we can expect tech lobbyists and industry trade organization representatives to be in Horchul’s ear.
Colorado Gov. Jared Polis and tech industry lobbyists have a different viewpoint
On June 3, 2026, Gov. Polis (D-CO) vetoed a surveillance pricing bill that would have banned the use of surveillance pricing to set worker’s wages and the price of consumer goods.
To be fair, this bill was larger in scope than the Maryland, Connecticut, and New York bills, as it would have applied to all sorts of industries, and workers’ wages as well. For example, it would have prevented rideshare companies from setting drivers’ wages based on data collected on them.
Tech and retail industry lobbyists agreed with Polis’ judgment, as they argued that the law was overly broad, likely to disrupt markets, and spur frivolous lawsuits. A common argument from lobbyist groups is that surveillance pricing bans prevent companies from offering customer discounts and loyalty programs, although we’ve already seen carve-outs for such things in the Maryland and Connecticut laws.
Given the situation with JetBlue, I suppose the argument that these surveillance pricing bans will spark class action lawsuits has some credence as well. However, I’d argue that a few class action lawsuits are warranted, at least in some instances.
Advice for organizations using surveillance pricing mechanisms
As a reminder, dynamic pricing is perfectly legal. Changing prices based on supply and demand, time of day, and inventory is all permitted; what is not permitted under these new laws is surveillance pricing: using individuals’ personal consumer data to set different prices for the same goods and services.
To get ahead of the privacy legislation, organizations should examine their pricing strategies to assess exactly what, if any, personal consumer data goes into the organization’s pricing algorithms. Under certain circumstances, state Attorney Generals, and possibly the FTC, will demand this information, so it is best to be prepared.
Also, Maryland and Connecticut now have bans on surveillance pricing of retail and food delivery services. New York could have an even stronger law coming down the pike, and at least 24 other states have similar legislation in the works. Surveillance pricing is no longer a low-risk business activity. Even if the federal government remains on the sidelines, it looks like some states will take data privacy matters into their own hands.
