U.S. consumers angry over high-tech pricing as regulators take action

Analysis

U.S. consumers are angry and confused about the increasingly high-tech ways that restaurant chains and major retailers are setting prices.

Digital price tags are rapidly replacing paper ones in grocery aisles, while artificial intelligence tools help businesses decide what to charge.

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Terms like "dynamic pricing" and "surveillance pricing" are stirring anxiety on social media, where users wonder if different people are getting different prices for the same product.

"There are major tensions happening right now between who's really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper," said Katie Thomas, who leads an internal consumer behavior think tank at the management consulting firm Kearney.

Companies using the technology say some concerns stem from misconceptions about how their pricing tools work.

Walmart CEO John Furner said in a blog post last month that digital price tags save workers' time and keep prices up to date.

He said the labels aren't used to raise prices based on the weather, time of day or individual shopper.

"We price the product, not the person," Furner wrote.

But companies aren't always transparent about the customer data they collect and how it's used, which has made consumers suspicious and led to speculation.

For example, social media posts falsely imply that electronic shelf labels Walmart plans to put in all its U.S. stores scan shoppers' faces or cellphones to set individualized prices, Thomas said.

Regulatory response grows

Lawmakers and regulators are taking action.

Legislators in at least 30 states have considered pricing bills this year, including measures addressing algorithmic and personalized pricing, according to the National Conference of State Legislatures.

The Federal Trade Commission has proposed an enforcement policy warning businesses that failing to disclose their use of personal data to set individualized prices could violate consumer protection law.

Lawmakers in Maryland, New Jersey and Connecticut recently enacted restrictions on using shoppers' personal data to determine what they pay.

The Maryland and New Jersey laws focus on groceries, with exceptions for certain loyalty discounts and other promotional offers.

Connecticut's legislation covers a broader range of retail purchases.

Scrutiny on dynamic and personalized pricing

Dynamic pricing means adjusting prices in response to changing market conditions, including supply and demand.

Frequent price changes extend well beyond food.

Decodo, a web data company, tracked price changes in 2025 across products ranging from electronics to clothing and home improvement supplies.

About half the U.S. changes it recorded were decreases, contrary to consumers' assumptions that dynamic pricing only raises prices, said Gabriele Vitke, a senior product marketing manager.

Personalized pricing, also called surveillance pricing, means offering customers different prices and discounts based on their locations, incomes, web-browsing habits and other information.

It's unclear how widely businesses use personal information to customize prices.

An FTC staff report released in January 2025 found that intermediaries offering tools that can tailor prices and promotions worked with at least 250 clients, including grocery and clothing retailers.

California prosecutors sued Target in 2022, alleging that the retailer's app displayed lower prices before shoppers entered stores and raised them once they were inside.

Target agreed to a $5 million settlement and a ban on using so-called geofencing technology to increase prices.

Target said the app functionality at issue was used to "provide guests with accurate pricing, which can vary across stores and channels."

The retailer said it didn't personalize prices based on a guest's data or behavior and remains "committed to clear, transparent pricing."

Different prices do not necessarily mean personal data was used.

Last year, an investigation by Consumer Reports, Groundwork Collaborative and More Perfect Union found that shoppers on Instacart were shown different prices for identical products at the same stores.

Instacart subsequently ended what it described as tests that randomly assigned shoppers to groups rather than setting prices based on their personal information.

Digital labels and industry pushback

Digital price labels, long used in Europe and Asia, are drawing more attention as they spread to major U.S. retailers like Walmart and Whole Foods.

Consumer advocates have argued that digital labels could eventually be used for surge pricing or personalized pricing.

Labour unions also have opposed the technology.

The electronic shelf labels make frequent changes easier but don't necessarily lead to higher prices during periods of strong demand.

Retailers typically update electronic shelf prices on a regular schedule, often weekly, because shoppers value consistency, said Asa Farquhar of Relex Solutions, a retail technology company.

Researchers who tracked prices at an unnamed grocery chain found "virtually no surge pricing" after the labels were introduced.

"Changing prices throughout the day, the way airlines or rideshare apps do, is exceedingly rare in grocery and general merchandise today," Farquhar said.

Algorithmic pricing uses software to recommend or automatically set prices, and AI can help the software identify patterns to predict demand.

It's unclear how widely retailers use AI to help set prices, but research suggests businesses across industries are adopting it.

Simon-Kucher, a global consulting company, surveyed more than 2,200 business leaders in 28 countries and 39 industries last year, and 41% said they used AI software to gather market intelligence, including competitors' prices.

With files from Yahoo News and Toronto Star