‘Surveillance pricing’: Why you might be paying more than your neighbour

You spell into a store to bargain a two-litre vessel of beverage astatine your section supermarket and wage $3. But the idiosyncratic earlier you successful the queue paid $3.50. And the idiosyncratic aft you paid $2. What if those prices were based connected your idiosyncratic information oregon circumstances, oregon adjacent the artillery powerfulness connected your phone?

This whitethorn dependable similar subject fiction, but it’s not arsenic far-fetched arsenic you mightiness think.

In July, US radical Delta Air Lines revealed that astir 3 percent of its home fare pricing is determined utilizing artificial quality (AI) – though it has not elaborated connected however this happens. The institution said it aims to summation this fig to 20 percent by the extremity of this year.

The quality raised concerns among consumers that Delta mightiness beryllium utilizing customers’ information to find what to complaint them. So, US Senators Mark Warner, Ruben Gallego and Richard Blumenthal sent a letter to Delta Air Lines requesting further accusation astir its reported plans to instrumentality AI-driven “dynamic pricing”.

“Delta’s existent and planned individualised pricing practices not lone contiguous information privateness concerns but volition besides apt mean fare terms increases up to each idiosyncratic consumer’s idiosyncratic ‘pain point’ astatine a clip erstwhile American families are already struggling with rising costs,” the missive stated.

Although Delta did not contradict utilizing AI to acceptable prices, it replied, telling the senators that it does not usage it for “discriminatory oregon predatory pricing practices”.

According to erstwhile Federal Trade Commission Chair Lina Khan, however, immoderate companies are capable to usage your idiosyncratic information to foretell what they cognize arsenic your “pain point” – the maximum magnitude you’re consenting to walk for a circumstantial bully oregon service.

In January, the US’s Federal Trade Commission (FTC), which regulates just competition, reported connected a surveillance pricing study it carried retired successful July 2024.

It recovered that companies tin cod information straight done relationship registrations, email sign-ups and online purchases successful bid to bash this. Additionally, web pixels installed by intermediaries way integer signals including your IP address, instrumentality type, browser information, connection preferences and “granular” website interactions specified arsenic rodent movements, scrolling patterns and video viewing behaviour.

This is known arsenic “surveillance pricing”.

What is surveillance pricing?

Surveillance pricing is the signifier of monitoring user information to acceptable individualised prices successful bid to maximise profits for the retailer.

Put simply, having entree to your idiosyncratic accusation enables retailers to complaint you the astir they deliberation you volition beryllium consenting to pay.

In a 2024 research paper, Oren Bar-Gill, ineligible student and economist astatine New York University, describes surveillance pricing arsenic follows: “Fuelled by large data, algorithmic terms favoritism enables sellers to parse the colonisation of imaginable customers into finer and finer subcategories – each matched with a antithetic price.

“In immoderate cases, sellers are adjacent capable to acceptable personalised pricing, marching down the request curve and mounting a antithetic terms for each consumer.”

In an interrogation with economist Robert Reich successful July this year, Khan said: “Evidence shows that ride-sharing apps are charging antithetic prices for the nonstop aforesaid rides astatine the nonstop aforesaid time. It’s not wholly clear, but researchers ran tests and recovered that riders with little artillery beingness connected their telephone were charged more.”

Delta Airlines reportedly wants to usage AI to acceptable individualized summons prices for passengers.

It's the latest institution to clasp a shady maneuver called "surveillance pricing" that weaponizes your idiosyncratic data.

Watch Lina Khan explicate however it works. pic.twitter.com/pnRJTyLZq6

— Robert Reich (@RBReich) July 16, 2025

Uber denies it is deliberately targeting immoderate of its app users with higher prices. However, its erstwhile caput of economical research, Keith Chen, did uncover successful an NPR interview successful 2016 that the institution had discovered that users with debased artillery beingness were much apt to judge surge pricing.

“Uber has recovered that those with a debased artillery thin to judge the surge terms regardless, due to the fact that they request a thrust location that minute, alternatively of waiting an other 15 for the surge to perchance spell down.

“We perfectly don’t usage that to benignant of propulsion you a higher surge price, but it’s an absorbing benignant of intelligence information of quality behaviour.”

Then, successful 2023, an probe by Belgian paper La Derniere Heure besides recovered that prices for the aforesaid travel connected the Uber app tin beryllium antithetic for antithetic users. In particular, its trial recovered that the aforesaid thrust from the newspaper’s bureau successful Brussels would outgo much ordered from a telephone with 12 percent artillery – 17.56 euros ($20.51) than from 1 with 84 percent – 16.60 euros ($19.39).

When approached for comment, Uber denied this, stating: “Uber does not instrumentality into relationship the phone’s artillery level to cipher the terms of a trip. The dynamic pricing applied to trips booked via Uber is determined by the existing request for rides and the proviso of drivers who tin respond to it.”

How does surveillance pricing work, exactly?

Retailers tin show your online behaviour by signaling what you click on, your browsing time, determination and instrumentality prime and harvester each this with your acquisition past to find your “price sensitivity”.

“Price sensitivity” typically measures however overmuch customers’ buying behaviours alteration successful effect to shifts successful merchandise prices.

To bash each this, they usage AI surveillance tools to nutrient pricing recommendations. These blase systems run crossed a spectrum, from wide store-wide pricing strategies to personalised, real-time terms adjustments tailored to idiosyncratic individual behaviour patterns.

A wide scope of consumer-facing businesses – some online-only and high-street retailers – including grocery, apparel, wellness and beauty, location goods, convenience, hardware and wide merchandise retailers, were included successful the January FTC surveillance pricing study.

According to the study, these are immoderate of the ways retailers are utilizing surveillance pricing to assorted degrees:

• Targeting ‘reluctant gamblers’: For instance, the survey found, “if a hypothetical lawsuit who visits a sports betting website demonstrates hesitation by lingering connected the homepage longer than expected oregon moves their cursor towards the fastener to adjacent retired their browser tab, the website whitethorn trigger a pop-up showing fashionable sporting events to incentivise the visitant to stay connected the website and spot a bet.”
• Targeting inexperienced buyers: For example, a car dealership could connection an in-store kiosk to assistance customers research antithetic conveyance models, features, and fiscal options for a car. This lawsuit tin past perchance beryllium “segmented” arsenic a “first-time car buyer”, implying the shopper mightiness beryllium “less savvy astir the options disposable and beryllium promoted peculiar financing rates, trade-in discounts, oregon attraction products”, the survey concluded.
• Targeting customers selecting ‘fast delivery’ option: For example, a genitor selecting the “fast delivery” enactment for a acquisition of babe look could beryllium a rushed genitor who whitethorn beryllium little “price-sensitive”.
• Excluding loyal customers from discounts: For example, the survey said, a pharmacy could take to exclude regular customers from a peculiar promotion for over-the-counter medications oregon weight-loss supplements due to the fact that it believes those customers would bargain the products anyway. “Instead, it whitethorn people discount codes to a radical of infrequent buyers for these products who whitethorn beryllium ‘at risk’ of disengaging.”
• Analysing lawsuit behaviour: “Actions similar placing an point successful a cart, but not purchasing, oregon sorting a provender of products from ‘lowest’ to ‘highest’ price, could hypothetically beryllium utilized to infer aspects specified arsenic a shopper’s affectional state, acquisition intent, oregon fiscal sensitivity,” the survey concluded.
• Video engagement: Online retailers tin find however apt idiosyncratic is to wage higher prices done measuring their engagement with accusation videos, the survey found. “An online retailer for survivalist gear, for example, could usage the accusation that a tract visitant watched astatine slightest 65 percent of a video connected its homepage arsenic a awesome that they mightiness beryllium receptive to substance messages urging them to marque a purchase,” it said.
• Using idiosyncratic information for targeted advertisements: For example, a cosmetics institution could cod accusation connected consumers’ tegument types oregon tegument code done a survey. “The institution tin past usage that accusation astir tegument code to people consumers with ads oregon promotions,” the survey found.
• Location-based pricing: Retailers tin tailor their websites truthful that visitors spot lone the circumstantial prices featured successful the store nearest to their location.

How is AI utilized successful surveillance pricing?

Retailers are utilizing AI to stitchery elaborate accusation astir consumers, including login data, location, browsing behaviour, “abandoned cart items”, and adjacent rodent question patterns, and past feeding this accusation into pricing algorithms.

AI assesses an individual’s willingness to wage (WTP), past systematically tests assorted terms points to place the optimal terms which volition make the astir revenue.

“Sellers are progressively utilising large information and blase algorithms to terms discriminate among customers,” says Bar-Gill. “Indeed, we are approaching a satellite successful which each user volition beryllium charged a personalised terms for a personalised merchandise oregon work … galore retailers and question sites acceptable personalised prices that alteration by hundreds of dollars from 1 user to the next.”

He adds that intermediaries who specialise successful identifying consumers’ willingness to wage (WTP) and merchantability this accusation to retailers person besides begun to emerge.

Is this adjacent allowed?

Yes, but it is progressively being called into question.

This twelvemonth truthful far, US authorities legislators person introduced 51 bills crossed 24 states aimed astatine regulating algorithmic pricing, a important emergence from the 10 bills passed successful each of 2024.

Many of these legislative measures specifically people rent-setting software, which enables price-fixing successful lodging markets. Advocates are besides pushing for limits connected surveillance-driven pricing that tailors costs based connected idiosyncratic data, determination oregon browsing behaviour.

In particular:

• On May 9, New York Governor Kathy Hochul signed A3008, banning undisclosed personalised algorithmic pricing.
• Two Ohio Senate bills, SB 79 and SB 328, necessitate businesses earning much than $5m to pass consumers if a terms oregon word comes from a pricing algorithm.
• California Assembly Bill 446 sought to prohibition surveillance pricing with idiosyncratic data. However, it faced beardown absorption and was mostly struck down, though statement continues connected different bills.

Other countries are besides introducing regulations. As of April 2025, the Digital Markets, Competition and Consumers Act DMCCA lets the Competition and Markets Authority (CMA), the United Kingdom’s main contention regulator, good companies up to 10 percent of planetary gross for unfair oregon misleading user practices, including hidden oregon biased integer pricing.

Public information and regulatory authorities volition proceed to play an important relation successful reducing the hazard of corporations utilizing idiosyncratic information for unfair pricing practices.

Is surveillance pricing new?

Not truly – it’s much that the sanction of this signifier has changed implicit time. It has antecedently been known arsenic “price discrimination” oregon “dynamic pricing”.

In 2008, Norwich Union, the UK’s largest insurer, present called Aviva, discontinued its “Pay As You Drive” car security argumentation owed to lawsuit fears astir surveillance and privacy.

The “Pay As You Drive” strategy utilized outer exertion and tracking devices to show drivers’ question patterns, providing discounted premiums to customers who avoided high-risk driving periods.

Today, galore UK insurers supply surveillance instrumentality known arsenic a “black box”, which caller drivers plug into their cars. The amended you drive, the little your premiums.

In the 2000s, Amazon experimented with dynamic pricing, offering varied DVD prices utilizing lawsuit browsing information and website cookies. After galore lawsuit complaints, debates astir fairness and transparency successful e-commerce began. Some critics argued Amazon’s signifier resembled terms discrimination, raising ethical concerns.

Amazon said the pricing experimentation selected random customers only and denied intentionally targeting circumstantial buyers.

However, successful a September 2000 statement, Amazon issued an apology to customers regarding the price-testing programme and said it had ceased the experiment.

“We’ve ne'er tested and we ne'er volition trial prices based connected lawsuit demographics,” Amazon CEO Jeff Bezos said successful a statement. “What we did was a random terms test, and adjacent that was a mistake due to the fact that it created uncertainty for customers alternatively than simplifying their lives.”

How tin consumers support themselves from terms discrimination?

The FTC Surveillance Pricing study lists respective ways successful which consumers tin support their data.

These see utilizing backstage browsers to bash your online shopping, opting retired of user tracking wherever possible, clearing the cookies successful your past oregon utilizing virtual backstage networks (VPNs) to shield your information from being collected.

It noted, however, “These steps tin beryllium hard to support and whitethorn not beryllium afloat effective, since galore companies usage instrumentality fingerprinting oregon different little evident tracking methods.”

Device fingerprinting allows companies to way radical by utilizing unsocial accusation from their devices, specified arsenic their browser settings and what hardware and bundle they use.

Consumers tin besides usage “private mode” erstwhile browsing to fell their activity or conscionable stock little idiosyncratic data. However, precocious tracking technologies inactive marque it hard to afloat flight surveillance-driven pricing mechanisms.

In its July 2024 Surveillance Price Gouging report, California nonprofit organisation Consumer Watchdog recommended that consumers request much openness from retailers by insisting they disclose however they usage idiosyncratic accusation to find pricing, and usage existing privateness settings and information opt-out options.