Opinion: New York must fight back against surveillance pricing

Imagine two passengers sitting side by side on a flight on the same airline, flying the same route – but one of them pays $100 more for their tickets simply because her web search history shows that she was looking at obituaries and needed to travel to attend a funeral. Or a mother pays more for baby supplies at checkout because her baby is sick, and she is searching for medicine. These aren’t flukes. They’re features of a hidden system designed to exploit consumers known as “surveillance pricing.” And it’s happening every day, to all of us, without our knowledge.

Companies use complex pricing algorithms to analyze everything from your web browsing history and location to the time of day and even the type of device you’re using. They do this to quietly charge different people different prices for the same product or service. Sometimes, it’s just a few cents. Other times, it’s hundreds of dollars.

In today’s data-driven economy, corporations use artificial intelligence and machine learning to set prices based not just on market demand, but on personal data. These systems analyze everything from browsing habits and zip codes to income levels and race and then offer different prices to different people. Their goal isn’t fairness; it’s profit. In many cases, the results are deeply unfair.

How companies use your data against you

Surveillance pricing isn’t a theoretical problem. The U.S. Federal Trade Commission, under former Chair Lina Khan, issued a groundbreaking report detailing how companies manipulate prices using personal data.

Staples once charged people more for the same stapler if they knew the person had fewer options. Amazon has also been accused of setting personalized prices, using customer data like their location, browsing history, and past purchases. With 2.5 million price changes a day, the cost of an item on Amazon can shift every 10 minutes.

These rapid changes aren’t random. They’re driven by vast amounts of personal data, which allows companies to charge each individual what they think they can get away with and max out on profit. A Yale study found personalized pricing increases airline revenues by 4-5%, or roughly $7 to $10 billion each year.

This type of pricing takes power away from consumers and gives it to companies. We need to make the online marketplace fair.

A game-changing bill to stop algorithmic price gouging

New York has the opportunity to lead the nation in stopping this hidden form of surveillance pricing. That’s why we have introduced the Preventing Algorithmic Discrimination Pricing Act (A6765/S07033), which would make New York the first state to confront this issue head-on.

Our bill would promote transparency, requiring online retailers and service providers to disclose when prices are set using personal data and include a prominent notice next to the price stating: “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.” The bill would hold corporations accountable, ensuring businesses can’t exploit consumers through hidden price manipulation. It would also ban companies from taking into account certain kinds of sensitive information about people – including their gender, ethnicity, age and pregnancy status – when setting prices. The legislation authorizes the state attorney general’s office to investigate and apply civil penalties when companies do not comply.

Why we must act now

Consumers deserve to know when they’re being profiled, and they deserve protection from predatory practices that erode trust in our digital economy. We know that our consumer protections are being dismantled in Washington, D.C., as seen by the shuttering of the Consumer Financial Protection Bureau just last month.

New York has always been a leader in standing up for fairness, transparency and justice. As surveillance pricing becomes more widespread and sophisticated, we must meet the moment with bold, clear action. New York must pass this bill and bring pricing out of the shadows.

Our values – and our wallets – are at stake.