Pennsylvania is considering legislation to address dynamic pricing, a practice where prices for essential goods and services change rapidly based on demand or other factors, including the use of artificial intelligence.
Senate Bill 1205 aims to prohibit “unfair methods of competition and unfair or deceptive acts or practices” related to dynamic pricing. The bill defines dynamic pricing as altering prices within a 24-hour period.
Dynamic pricing has become increasingly common, with companies like Uber utilizing “surge” pricing during peak times. Similar to dynamic pricing is surveillance pricing, which adjusts costs based on a customer’s behaviors and characteristics. Algorithmic pricing uses data – both generalized and personalized – to determine cost.
Novel York took action in November with the Algorithmic Pricing Disclosure Act, requiring businesses using algorithmic pricing to state, “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”
Other states are also considering legislation concerning surveillance pricing, including Arizona, Florida, Hawaii, Illinois, Kentucky, Nebraska, Oklahoma, Tennessee, Vermont, Virginia, and Washington.
Instacart ended price tests in December after a Consumer Reports investigation revealed differing prices for the same products based on customer data, with variations reaching 23 percent. Still, other companies, such as Sony, continue to experiment with dynamic pricing.
Frequently Asked Questions
What is dynamic pricing?
Dynamic pricing refers to changing the prices of essential goods or services within a 24-hour period based on demand or other factors, including the use of artificial intelligence.
Which states are considering legislation on pricing practices?
Arizona, Florida, Hawaii, Illinois, Kentucky, Nebraska, Oklahoma, Tennessee, Vermont, Virginia, and Washington are considering legislation concerning surveillance pricing.
What did New York’s Algorithmic Pricing Disclosure Act require?
The law requires most businesses that engage in algorithmic pricing to have a clear disclaimer near the price stating, “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”
As more companies explore automated pricing strategies, will consumers have greater visibility into how prices are determined?
