In today’s marketplace, businesses hold vast amounts of consumer data. That data plays a central role in shaping business strategies. One of the most critical aspects of any business strategy is pricing and the process of determining how much to charge for a product or service and to whom. Price discrimination refers to a business charging different prices for different consumers. There are many commonly recognized forms of price discrimination. For example, companies often offer discounts to students, seniors, and military personnel. Many businesses also offer loyalty discount programs, where members receive special pricing. Airlines are known to increase prices based on demand and proximity to departure date, and ride share apps will have hours of surge pricing in light of increased demand during that timeframe. Though these forms of price discrimination are generally permissible under antitrust and privacy laws, some forms of price discrimination have drawn far more scrutiny in recent years.

One such form is surveillance pricing, in which a business uses advanced data collection technologies to set targeted, tailored prices for goods and services. Surveillance pricing may entail a business analyzing location data, consumer preferences, previous purchase history, demographics, and browser history to set a price based on the business’s estimate of each consumer’s maximum payment capacity. Surveillance pricing raises concerns under both antitrust and privacy laws because it can hinder competition and exploit consumers.

Against this backdrop, lawmakers have begun to take action. Colorado, Georgia, Illinois, and Minnesota introduced legislation restricting surveillance pricing this year. In February 2025, Senator Ward in California introduced Assembly Bill 446, which aimed to create a blanket ban on surveillance pricing in the state, making it unlawful for any person or business to engage in the practice. States are not the only regulatory bodies interested in limiting surveillance pricing. In July 2024, the Federal Trade Commission (FTC) issued orders to eight companies seeking information on their alleged surveillance pricing tactics. In January 2025, the FTC released initial findings from its investigation into surveillance pricing. Then-FTC Chair Lina Khan noted that “[i]nitial staff findings show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person’s location and demographics, down to their mouse movements on a webpage,” adding that  “[t]he FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.”

Since the California bill’s proposal, the state’s lawmakers received substantial input from industry groups both supporting and opposing. Consumer rights groups favored the bill, arguing that surveillance pricing increases economic inequality by penalizing lower-income consumers simply because they are less able to spend freely. On the other hand, opponents of the bill expressed concern that a broad ban would limit small businesses’ ability to target ads effectively. They also worried the bill might prompt companies to discontinue loyalty and discount programs that, in some cases, lower prices for consumers.

On August 29, 2025, the California state Senate Appropriations Committee significantly narrowed the proposed bill, limiting its reach to only grocery prices. This move reflects the particular sensitivity around grocery shopping and data collection related to it. While consumers may be able to delay or avoid purchasing luxury items such as electronics or entertainment services, grocery staples like bread, milk, and produce are essential. For this reason, surveillance pricing in the grocery sector poses unique risks, potentially creating disproportionate burdens on vulnerable households. Since the narrowing of the scope, the bill has been read a second time and was ordered to third reading on September 2, 2025. The third reading is the final stage of debate and voting on the bill before it passes to the full state Senate for consideration. Businesses should review their data collection practices to evaluate which categories of information are necessary for their business goals. Collecting more data than necessary can increase regulatory risk. In addition, businesses should always disclose in plain language how consumer information is used, including for the purpose of setting prices. Transparency can help build consumer trust. The regulatory interest in this area suggests that both state and federal policymakers will continue to grapple with how best to balance innovation, competition, and consumer protection.