California lawmaker pushes to ban AI-powered surveillance pricing before legislative deadline

By Darrielle Fair

A California lawmaker is making a final push to pass legislation that would restrict companies from using consumers’ personal data and artificial intelligence to set individualized prices, with supporters hoping to send the bill to the governor before the Legislature adjourns at the end of the month.

Assembly Bill 446, authored by Assemblymember Chris Ward, D-San Diego, would prohibit businesses from using a consumer’s personal information to determine how much they are willing to pay for a product or service, a practice commonly referred to as “surveillance pricing.”

Ward said negotiations over the bill are continuing as lawmakers work to address concerns raised by opponents while preserving the measure’s core protections.

“We are actively meeting daily, both with opposition but also with other interested partners, to make sure that the technical detail of this is right,” Ward said.

The current California Consumer Privacy Act (2018) grants consumers various rights over their personal information, but it does not address how businesses use the data when setting prices.

“While California provides some of the strongest privacy protections in the nation, existing law does not restrict businesses from using consumer data to change their internal pricing, a form of individualized price discrimination,” said Assemblymember Ash Kalra.

Ward said he is willing to make amendments to the bill to gain additional support but does not want to weaken it to the point that it becomes ineffective.

Democratic lawmakers, union leaders, and consumer advocacy groups say they hope to get the legislation onto Gov. Gavin Newsom’s desk before the August 31 deadline. 

“I am really imploring our Senate to be able to do the right thing and find the courage because there’s been a lot of opposition voices,” said Ward, who has led the effort to pass AB 2564. 

Supporters say surveillance pricing allows companies to use artificial intelligence and data collected through web browsing, app usage and other online activity to determine what individual consumers may be willing to pay, resulting in different prices for the same product.

“We need to make sure that we are not treating different people differently across the board, but particularly when it comes to this affordability question, that we’re using their own personal information to decide whether willingness to pay is for something and really discriminate based on that,” Ward said.

Opponents of AB 2564 have claimed that the bill would prohibit both price increases and decreases, pointing to the potential loss of discounts.  

California is among multiple states, including Maryland and Connecticut, that have passed or are considering similar measures.  

Lorena Gonzalez, president of the California Labor Federation, AFL-CIO, said the legislation targets large companies that use extensive consumer data to maximize profits rather than small businesses offering traditional discounts or coupons.

“We’re talking about Instacart and Vons and using everything about you, everything they know about you, which unfortunately is a lot, to extract as much profit as possible,” she added.

Gonzalez acknowledged it can be difficult for consumers to prevent companies from collecting their personal data as artificial intelligence becomes more integrated into everyday technology.

“It’s really hard,” Gonzalez said. “I often see like I don’t use AI, right. But I just realized if I Google something now, I can’t avoid AI.”

Ward said he expects to introduce another round of amendments before asking the Senate to take up the bill for a floor vote in the coming weeks.

He added that he is in close conversation with Governor Newsom’s office to give the bill the best chance of becoming law, and there will likely be one more set of amendments in the coming weeks.