Pennsylvania becomes latest state to fight dynamic pricing

Pennsylvania has become the latest state to propose legislation to fight dynamic pricing.

The state’s Senate Bill 1205 would prohibit “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce,” namely, promoting or engaging in dynamic pricing. In the bill, 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.

Dynamic pricing is a practice that’s become more common among retailers in recent years. Wendy’s walked back the decision to engage in it in 2024 after backlash, but apps like Uber have “surged” prices during busier times for a while now.

A similar practice is surveillance pricing, which uses customers’ behaviors and characteristics to set different costs for the same items. And algorithmic pricing uses data — sometimes generalized data, such as when demand is highest, and other times personalized data, such as one’s demographic — to determine cost.

In November, New York’s Algorithmic Pricing Disclosure Act went into effect. This 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.”

Other states considering legislation concerning surveillance pricing are Arizona, Florida, Hawaii, Illinois, Kentucky, Nebraska, Oklahoma, Tennessee, Vermont, Virginia, and Washington, according to the Arizona Capitol Times.

In December, food delivery service Instacart ended its controversial price tests following a Consumer Reports investigation that found that it priced the same products differently for different customers, sometimes as much as 23 percent. But that hasn’t stopped the likes of Sony from experimenting with dynamic pricing.