The Price You See Online May Have Been Picked Just for You

The price on your screen may not be the price your neighbor sees. According to recent reports and a new investigative book, algorithms are now setting prices not on product quality or market value, but on individuals — a practice that spans airline tickets, groceries and nearly everything in between.

The book at the center of the debate is Gouged: The End of a Fair Price — And What That Means For Your Wallet, written by Lindsay Owens, president and CEO of the Washington think tank Groundwork Collaborative and a former economic policy advisor to Sen. Elizabeth Warren. The newly released exposé documents how surveillance-based price discrimination, AI shopping assistants and algorithms push consumers toward higher prices, powered by corporations digging deep into shopper data.

Owens laid out the mechanics earlier this year before a Senate Judiciary Subcommittee on Crime and Counterterrorism, one of five witnesses testifying at a hearing on how companies use AI and data collection to manipulate pricing. In her testimony, she described how Walmart, Kroger, Instacart and major airlines harvest customer data to fuel modern pricing tactics.

"Surveillance pricing isn't just unfair. It erodes transparency and predictability and makes it harder for families to budget, let alone comparison shop. As we do more of our shopping online and on our phones, we have no idea if we're being charged a different price than our neighbor," she said.

The tools companies use go well beyond browsing history. Owens explained that firms track purchases, location, and even loyalty and reward programs to predict how much they can charge a given shopper. The systems can even estimate whether a customer is likely to comparison shop at all.

Not every witness at the Senate hearing agreed the practice harms consumers. Z. John Zhang, a professor of marketing at the University of Pennsylvania's Wharton School, offered the opposing view. "Firms don't always gain from personalized pricing," Zhang told the subcommittee.

He continued: "Research shows that it can intensify competition and reduce profits. The firms that are most likely to benefit from personalized pricing are those with higher quality products, stronger brands, and more loyal customers."

Regulators have started to move. In August, the Federal Trade Commission issued an enforcement policy statement warning that corporations using such tactics may be breaking the law. "When consumers walk into a retail store, for example, they reasonably expect the price on the shelf to be the same price offered to any other consumer shopping at the same store at the same time," the FTC said.

The agency added: "Likewise, when they browse to a product listing on a retailer's website, they reasonably expect the price to be the same price that anyone else browsing to that listing would see, not a price set based on the retailer's analysis of their personal data and conclusion as to how much they would be willing to pay for that product as compared to some other consumer."

State legislatures are acting faster than Washington. Around two dozen states have already introduced bills addressing surveillance pricing, according to a tracker cited by Owens. Some proposals would ban or regulate pricing based on personal data collection; others would require merchants to disclose whether they set personalized prices.

Owens argues that voluntary change will not come without government intervention, including bans on manipulative price-setting practices. She also proposes a Shopper's Bill of Rights, a set of principles she says lawmakers and shoppers alike should rally around. Its planks include "pricing products, not people"; the ability to "cancel with a click"; and no junk fees because "the price you see is the price you pay."

The platform polls well. According to a newly released survey by Blue Rose Research of 3,250 Americans, about two-thirds of respondents supported its policies.

Owens frames the fight as one consumers have won before. "Shoppers turned picket lines into policy before, and they can do it again," she says. With the FTC signaling enforcement and dozens of state bills in play, the cost of personalized pricing may soon rise for the companies that rely on it.