At a time when American shoppers are seeing price hikes from tariffs, the war with Iran and inflation, there’s another reason some shoppers are paying different prices, some consumer advocates and lawmakers say.
It’s surveillance pricing, which uses personalized information about you to potentially change the price. That is different than dynamic pricing, which is often called surge pricing, and changes with supply and demand.
“Pricing has changed in our economy and in our country,” said Lindsay Owens, author of “Gouged: The End of a Fair Price – and What That Means for Your Wallet.” “It used to be simple. How much does it cost to make the item, what’s the profit margin and put a sticker on it. Now it is a highly engineered science. Companies hire physicists, they hire AI specialists. They build algorithms that can change prices in a nanosecond at retail locations across this country.”
“It is truly coming for every line item in the household budget,” Owens, who is also executive director of Groundwork Collaborative, a progressive economic think tank, told USA TODAY.
Prices should be transparent, consumer advocate says
Surveillance pricing breaks the way the market is supposed to work, said Grace Gedye, senior policy analyst at Consumer Reports.
Prices need to be transparent and businesses need to be able to monitor what their competitors are charging, Gedye said.
“If businesses can charge each of us the most we, individually, are willing to pay for a product, we might end up being charged much more. Consumers who are desperate, or have few good alternatives, might wind up paying the most,” Gedye told USA TODAY.
AI-driven algorithms often used to set prices can also do so without understanding the context or without human marketing judgment, said Angela Zhou, assistant professor of data sciences and operations at University of Southern California’s Marshall School of Business.
But the National Retail Federation, which represents the U.S. retail industry, said critics are using “speculative” hypothetical surveillance pricing scenarios that are not supported by evidence that U.S. retailers are broadly employing the practices to raise prices.
“No one has produced empirical evidence or data that retailers are increasing prices at the individual level on shoppers,” Jason Straczewski, NRF group vice president of governmental relations and political affairs, told USA TODAY.
Straczewski said retailers use surveillance pricing or personalized pricing “to better serve you and to offer you timely discounts or coupons or other types of savings that help stretch and make your dollars go farther.”
Some laws limit or ban surveillance pricing
Several states, including Maryland, Connecticut and New Jersey have begun passing laws to limit or ban surveillance pricing.
“Personalized pricing should be banned, with thoughtful exemptions that protect transparently offering personalized discounts,” said Gedye of Consumer Reports.
The NRF is in favor of protecting consumers from practices that would increase prices on shoppers because of their behavior, but said there are some states “that have gone too far with their definitions and are disrupting that competitive nature of retail, serving discounts and timely coupons and other benefits to the consumer,” Straczewski said.
The Federal Trade Commission has also proposed a new policy requiring businesses to disclose whether they are using personalized pricing, or surveillance pricing. However, Gedye said “that won’t do enough to protect consumers. Requiring all of us to read a bunch of disclosures just to figure out if we are being ripped off as we shop for our kids’ back-to-school supplies isn’t a good solution.”
Owens believes a federal law would be the best way to protect consumers, and along with Groundwork Collaborative is advocating for a “shoppers’ bill of rights.”
“Companies are getting better at calibrating your willingness to pay and squeezing you a little here and a little there at every turn,” Owens said.
Walmart says it will not use pricing tactics
At least one retailer says it does not use surveillance or dynamic pricing.
Walmart CEO John Furner, in a letter posted online on Sept. 25, said the retail giant will not be utilizing either practice. Later, in an online response to statements by Owens saying it has patents on technologies that could be used to change prices, Dan Bartlett, Walmart’s executive vice president for corporate affairs said “we price products, not people. Walmart does not and will not use an individual customer’s personal information, income, shopping history, urgency or willingness to pay to set an individualized price.”
Owens responded, saying in part, “the arsenal of technologies the company is building that can be used to profile and track us should worry every American who is concerned about their privacy and pocketbooks.”
How to protect your wallet
If varying pricing tactics are deployed, can consumers do anything to prevent paying more or less than their fellow shoppers?
Owens provided some tips that consumers can use to save money, but also acknowledged that some of them take time – a valuable and finite resource for shoppers.
Those tips include:
“A new kind of comparison shopping:” It’s not enough to check prices at different stores, Owens said. You have to check prices within the same store. Use different browsers, devices and incognito mode. Compare the price online to the price at the store. See if there is a price difference when you’re logged onto your loyalty account and when you’re not.
“Turning the experiment around:” Owens said if companies are experimenting on shoppers, turn it around. For purchases like plane or concert tickets or an Uber ride, have your spouse or friends pull up the same purchase at the same time. Book through whoever is getting the best price.
“Protect your data:” Try a VPN or switch to search engines like DuckDuckGo or Startpage, which don’t track your history, said Owens. In some states, you can demand to know what companies know about you, Owens said, and then ask them to delete it.
“Be wary of loyalty programs and AI shopping assistants:” It’s counterintuitive, but while loyalty programs will get you discounts, “in many cases loyalty programs are really just sophisticated data harvesting operations, building a detailed profile used to calculate how little the company can offer while still keeping that customer’s business. Ultimately the ‘reward’ can shrink or even disappear,” Owens said.
Similarly, Owens said AI chatbots and agents aren’t necessarily working for you. “Keep an eye out for sponsored results and other ads, and give clear budget guidelines, which have been shown to limit using what they know about you to offer higher priced recommendations.”
Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher and @blinfisher.bsky.social on Bluesky. Sign up for our free The Daily Money newsletter, which breaks down complex consumer and financial news. Subscribe here.
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