States Challenge AI-Driven Pricing Practices

States pursue bills to ban tech-driven pricing practices
19 states consider limiting third-party software for rental pricing
Concerns over data-driven pricing affecting consumer costs

Several U.S. states are moving to restrict technology-driven pricing practices, even as the White House considers measures to limit state-level regulation of artificial intelligence. Legislators argue that such practices contribute to rising costs for consumers and undermine fairness in markets. The push builds on earlier efforts by former Federal Trade Commission Chair Lina Khan, who used regulation and lawsuits to target what she described as exploitative tactics. Khan, now part of New York City’s transition team, has continued to advocate for stronger oversight of pricing systems.

Legislative Momentum Across States

New York passed a law in October preventing landlords from using algorithms to collude on rental prices. California followed with a broader ban on algorithmic collusion, extending restrictions to more sectors. According to the American Economic Liberties Project, nineteen states are currently considering bills to limit how businesses use third-party software that relies on competitor data to set housing prices. Advocates argue that affordability cannot be addressed without examining how prices are determined in real time through new digital tools.

The effort spans political divides, with lawmakers from both parties introducing proposals. In Utah, Republican representative Tyler Clancy is preparing legislation to give consumers more control over the data companies collect and use for pricing. Supporters believe these measures will help restore transparency and fairness in markets. Critics of current practices say consumers are often left unaware of how their personal information influences the prices they pay.

Concerns Over Data Use

Retailers increasingly rely on detailed consumer data, including purchase history, browsing behavior, and media consumption, to shape pricing strategies. While companies argue this enables targeted advertising and discounts, opponents warn it can also lead to discriminatory pricing. Investigations have shown that travel sites sometimes charge higher rates to shoppers in wealthier cities compared to those in less affluent areas. Delta Air Lines faced congressional scrutiny over its plan to use AI in ticket pricing, though the airline stated it would not apply the technology to individual customers.

Consumer advocates stress that the core issue is unequal treatment based on perceived willingness to pay. Grace Gedye of Consumer Reports noted that different people may face different prices for the same product depending on how a company interprets their data. Such practices raise ethical and legal questions about fairness in digital markets. The debate highlights the tension between innovation in pricing tools and consumer protection.

Federal-State Tensions

President Donald Trump is considering an executive order that would preempt state laws on artificial intelligence by pursuing lawsuits and withholding federal funding. This move could directly challenge state-level initiatives aimed at regulating algorithmic pricing. Despite federal resistance, states continue to advance legislation, reflecting growing concern over the impact of AI on everyday costs. Observers see the conflict as part of a broader struggle over who sets the rules for digital markets.