Trending
LANSING - Concern over the implications of how people's online activity impacts what they pay for products and services is prompting lawmakers to consider limiting businesses' ability to use consumers' personal data to determine their prices.
The proposed law addresses surveillance pricing - the practice of companies leveraging such data, including the history of customers' online browsing and their location and shopping patterns - to set prices for individual customers.
The practice raises questions about consumer privacy and economic fairness, said Kyle Zawacki, the legislative director of the American Civil Liberties Union of Michigan.
"Surveillance pricing is when tracking cookies on your phone and all the information that websites and social media collect about you would be weaponized to charge you more for things because they know you need something," Zawacki said.
Kyle Zawacki is legislative director of the ACLU of Michigan. (Photo Courtesy of ACLU of Michigan)
Earlier this year, lawmakers introduced a bill to restrict surveillance pricing and other personalized pricing practices. The legislation by lead sponsors Reps. Steve Frisbie, R-Battle Creek, and Rylee Linting, R-Grosse Ile, is part of a broader discussion about how companies use personal information when setting prices for goods and services.
The Federal Trade Commission has also investigated the practice. In a January 2025 report, the agency said third-party pricing services can use consumers' location, demographics, browsing habits and shopping history to help businesses tailor prices and promotions.
The FTC said the findings raised questions about how companies use personal data to determine what consumers pay and called for further investigation.
Some instances have led to the question of whether consumers will be charged different prices for identical items through personalization of the data or geographic location of the consumer.
A Consumer Reports investigation found that Instacart was conducting artificial intelligence-powered pricing experiments at a major retailer.
Separately, a Minnesota television investigation found that prices for some products displayed in Target's app were higher when shoppers were inside or near a store than when they were farther away.
Such reports illustrate concerns about personalized pricing, though they do not establish that the same practices are occurring at Michigan stores.
Documents from companies that provide pricing services to retailers were used to support the FTC's initial findings, the agency said.
It said it is conducting its own study and said its examples were hypothetical, not evidence of widespread practices.
The FTC has warned that use of personal data to set individualized prices may raise consumer protection concerns. In August, the agency sought public comment on a proposed enforcement policy statement, explaining that undisclosed uses of personal data to set prices could violate federal law prohibiting unfair or deceptive practices.
But retail industry advocates have warned Congress not to lump together all variable pricing.
The Michigan Retailers Association contends that proposed limitations should clearly differentiate between surveillance pricing practices and other pricing methods, including discounts, seasonal sales and price changes based on supply, demand or inventory.
The association has urged policymakers to consider how proposed restrictions on surveillance pricing could affect retailers and to ensure the legislation clearly distinguishes between using personal data to set individualized prices and other pricing practices.
Zawacki said the worry is that consumers may not be aware of how their information is being used or if it affects the prices they pay,
For instance, a company can assess a customer's online search habits or shopping patterns and deduce that he or she requires a product and may be prepared to pay a higher price for it, he said.
He also talked about the prospect of technology enabling companies to tweak pricing according to the actions of individual shoppers.
"If your economic rights are being impacted because you are being charged more because of who you are, the color of your skin or your zip code, that's a problem," Zawacki said.
The ACLU of Michigan has been advocating for a legislative solution to surveillance pricing.
Whether companies gather information in such a way is not the problem - it's how they use it to manipulate consumers' economic choices, said Zawacki.
That distinction is significant because states are considering various ways to regulate algorithmic pricing. Some variations are based on the demand or time of purchase, while surveillance pricing is based on the use of buyers' personal information to adjust prices to their particular group or individual.
The state Attorney General's Office also administers Michigan's Consumer Protection Act, banning unfair or deceptive business practices and empowering the attorney general to investigate and file lawsuits. The office processes consumer complaints and offers information on consumer rights.
Michigan lawmakers have proposed legislation addressing surveillance pricing to establish restrictions on how businesses can use consumers' personal information to increase prices.
The bills passed the House and are pending in the Senate Economic and Community Development Committee.
The ACLU of Michigan has argued that restrictions are needed to protect consumers from unfair uses of their personal information, while the Retailers Association has urged policymakers to consider how the rules could affect retailers' pricing practices.
Zawacki's stance is that if consumers don't know how their personal information will impact them monetarily and if businesses aren't responsible for how that information is used, then the problem is not being addressed.