Consumer Reports praises legislation prohibiting companies from setting prices based on personal data gathered about customers
SACRAMENTO, CA – Under a bill passed earlier this week by the California Assembly, companies would be prohibited from engaging in surveillance pricing, the practice of charging customers an amount based on personal data collected about them. Consumer Reports had urged Assemblymembers to support AB 446 to protect consumers from paying unfair prices when companies use surveillance technology to determine how much to charge.
“Consumers shouldn’t have to pay more for a product or service simply because of their online search history, income, health conditions or other personal data companies have gathered about them,” said Grace Gedye, policy analyst at Consumer Reports. “This bill will help ensure prices are fairer, more transparent and not based on personal characteristics that can result in higher prices for some consumers.”
AB 446, introduced by Assemblymember Christopher M. Ward, prohibits the use of a consumer’s personal data gathered by electronic surveillance technology to set a customized price for that customer. This includes, for example, data about a consumer’s race or weight, their parenthood status, their genetic information, the geometry of their face, their political affiliations, and their web-browsing history.
AB 446 also prohibits the secret and automated use of personal data to target groups of individuals with prices. For example, companies would be prohibited from using the fine-grained data they collect about consumers to secretly place them into highly specific groups for pricing, such as “mothers of toddlers without higher education earning less than $75,000” or “diabetic males over 35 earning more than $150,000.”
“Surveillance pricing based on a protected status, such as race or gender, is particularly harmful and unfair” said Gedye. “Consumers can also be hurt when companies use the data they have collected to charge them more based on their past willingness to pay higher prices or during moments of desperation.”
Surveillance pricing is unpopular among consumers. A Consumer Reports nationally representative survey of 2,022 U.S. adults in May 2024 found that 66 percent of Americans were opposed to the practice of online retailers selling the same goods and services at different prices depending on the buyer’s personal information. For the full survey report, see here.
AB 446 also includes several reasonable exemptions. For example, if a company offers different prices to different people based on differences in the cost of providing a good or service – like higher prices in regions with higher labor costs – that practice is not prohibited. The bill also does not apply to discounts that are offered transparently, such as loyalty programs or senior citizen discounts, that customers can access equally if they meet the clearly disclosed criteria.
Media Contact: Michael McCauley, michael.mccauley@consumer.org