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The basics:

• Pallone probes AI-driven surveillance pricing
• Walmart, Amazon, CVS among retailers targeted
• NJ lawmakers advance bill to ban some algorithmic grocery pricing practices
• Business groups defend loyalty coupons, rewards, personalized discounts

U.S. Rep. Frank Pallone, D-6th District, launched an inquiry into whether major retailers, grocery stores and pharmacies use surveillance pricing to charge certain customers more based on their personal data.

The ranking member of the House Energy and Commerce Committee sent a May 11 letter to 25 companies. Pallone posed detailed questions on the use of artificial intelligence and machine learning algorithms in conjunction with personal information about individuals to set prices.

“On top of tariffs jacking up prices for consumers, increasing inflation, and surging gas prices due to Trump’s reckless war of choice, Americans now have to worry their personal data may be used to charge them higher prices,” Pallone said. “I am very concerned about companies potentially using Americans’ personal data to determine what prices they see and pay.”

The Federal Trade Commission defines surveillance pricing as a form of personalized, dynamic pricing where companies use a consumer’s online data to determine individualized costs.

The practice came under fire in December 2025 following an investigation by Consumer Reports. The study found that third-party grocery delivery platform Instacart used an AI-driven algorithm to charge separate customers different prices for identical products from the same store based on analysis of their personal information.

In some cases, the price differences were as high as 23% for identical products, depending on the shopper and context.

After the Consumer Reports investigation, Instacart said it would stop the pricing experiment program that caused those differences.

Pallone is a longtime supporter of comprehensive data privacy legislation. He noted a lack of a strong federal privacy standard appears to have created a regulatory gray area. And the space has allowed surveillance pricing practices to surge.

“These actions by companies also exploit the lack of comprehensive consumer privacy regulation,” Pallone wrote. “Existing federal law does not sufficiently protect Americans’ data from misuse or adequately address consumer privacy concerns in surveillance pricing.”

“What’s worse is that Americans are often unaware that the prices they are paying, particularly and most notably when shopping online, might have been set using their own personal data,” he went on.

Pallone also said that Democrats on the Energy and Commerce Committee will focus on “asking questions across industries in the coming months to get a full understanding of the scope of surveillance pricing and what needs to be done to address it.”

ICYMI: This week, I opened a formal Congressional inquiry into surveillance pricing—the practice where companies use consumers’ personal data to set individual prices for products. Find out about my inquiry and the answers I’m seeking from 25 different retailers >> pic.twitter.com/upaBlVBGeu

— Rep. Frank Pallone (@FrankPallone) May 15, 2026

Shop talk

In the absence of federal regulations, New Jersey is among a growing number of states looking to ban algorithmic and personalized pricing in grocery stores. Others include California, Illinois, Colorado, Massachusetts and Vermont.

Last year, New York became the first state to enact a law. That measure requires a business to disclose when it generates prices using personal data and algorithms. Meanwhile, Maryland recently became the first to prohibit certain forms of surveillance pricing in the food retail sector.

In New Jersey, state Sens. Joe Cryan, D-20th District, and Joe Lagana, D-38th District, sponsor the Fair Price Protection Act. The measure would make it illegal under the state Consumer Fraud Act to use any pricing strategy that determines the cost of groceries and other food products based on consumer’s personal data. Sources include biometric, genetic information and protected class data.

The measure would also bar third-party delivery platforms from using surveillance data collected from consumers to charge different prices to different shoppers for the same products, according to the bill.

Grocery stores could not link surveillance pricing systems to digital shelf labels that change prices electronically. Instead, they would have to show food prices in a fixed, non-digital way so customers see the same, clearly displayed price — rather than one that can automatically change based on data or algorithms, the bill says.

Breaking the law could lead to fines as high as $50,000 in addition to Consumer Fraud Act violations of up to $10,000 for a first offense and up to $20,000 for any subsequent offense, the legislation says.

Bill sponsors note the measure would not prevent food stores from providing consumers with discounts from a promotional price; benefits from a loyalty program; or offering different prices to broadly defined groups, such as teachers, veterans or senior citizens.

Strong support, mixed reactions

Following a Feb. 19 introduction, the Senate Commerce Committee approved the bill March 16, sending it to the Budget and Appropriations Committee for further review.

Assembly members Rosaura Bagolie, D-27th District; Annette Quijano, D-27th District; and Chigozie Onyema, D-28th District, introduced companion legislation Feb. 19.

The bill appeared before the Assembly Consumer Affairs Committee and then moved on to the Assembly Commerce and Economic Development Committee. Lawmakers reported the legislation out of that committee in a May 14 vote.

The proposal has received mixed feedback.

New Jersey Gov. Mikie Sherrill has taken aim at surveillance pricing, pledging to move a ban forward as part of her affordability agenda.

A recently released poll conducted by six locals within the United Food and Commercial Workers and two locals in the Retail, Wholesale and Department Store Union (RWDSU) found that 65% of New Jerseyans favor legislation prohibiting electronic shelf labels in grocery stores.

The response comes amid concerns the technology enables retailers to use personal data for predatory, instantaneous price hikes.

With 73% of residents already worried about high grocery bills, the majority view these pricing technologies as likely to push costs higher, according to the results. The poll found that 61% think electronic price tags and 67% believe surveillance pricing will make supermarket trips more expensive.

Taking it personal

Meanwhile, a coalition of New Jersey business groups said they don’t oppose the idea of addressing surveillance pricing. However, members raised concerns the proposed legislation “casts such a wide net that it could wipe out the personalized discounts, loyalty rewards and tailored promotions that Garden State shoppers count on to make ends meet.”

The group also feels the measure is written so broadly, that it could fail to protect the very tools that provide coupons for seniors, students, families and shoppers on fixed incomes. They argue that personalized pricing tools, such as discounts and rewards, are transparent and consumer-driven, while surveillance pricing is hidden and non-consensual.

The group also warns that regulating these practices could push retailers toward a single uniform pricing model that eliminates personalization and potentially results in higher baseline prices for all consumers.

Coalition members include Commerce and Industry Association of New Jersey, New Jersey Business & Industry Association, New Jersey Food Council, New Jersey Retail Merchants Association and New Jersey State Chamber of Commerce.

A new poll commissioned by tech industry policy coalition Chamber of Progress found broad opposition among New Jerseyans to proposed restrictions on algorithmic pricing, too.

Morning Consult conducted the poll in April. The majority of the 818 respondents said they support keeping loyalty rewards, targeted coupons and other discount programs even if they rely on consumer data and algorithms.

According to the poll, 70% of New Jersey residents oppose banning loyalty programs, coupons, senior discounts and student pricing tied to algorithmic systems. Just 14% support such restrictions.

The findings also suggest many consumers prioritize affordability over uniform pricing. Sixty nine percent say they prefer access to personalized discounts even if different shoppers pay different prices for the same item.

Other noteworthy numbers:

• 61% find it reasonable for loyalty programs to offer different prices to different customers
• 71% believe requiring uniform discounts would lead businesses to reduce or eliminate discounts entirely
• 76% belong to loyalty or rewards programs
• 74% are willing to share some shopping data in exchange for discounts
• 43% are less likely to support lawmakers backing algorithmic pricing bans

In a statement to NJBIZ, Chamber of Progress Policy Manager Drew Ambrogi said, “Gov. Sherrill is right that no one should be charged more for the same gallon of milk because of who they are. But the bill on the table is broad enough to sweep up the loyalty rewards and personalized deals that most New Jerseyans use to lower their grocery bills.

“Policymakers should ensure that the final bill protects these discounts.”