Pennsylvania becomes latest state to fight dynamic pricing

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

State Senate Bill 1205 would prohibit “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any commerce,” namely the promotion or practice of dynamic pricing. In the bill, dynamic pricing refers to changing the prices of essential goods or services over a 24-hour period based on demand or other factors, including the use of artificial intelligence.

Dynamic pricing is a practice that has become more common among retailers in recent years. Wendy’s reversed its decision to launch in 2024 after backlash, but apps like Uber have been “raising” prices during busier times for some time now.

A similar practice is surveillance pricing, which uses customer 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, like a person’s demographics — to determine cost.

In November, New York’s Algorithmic Pricing Disclosure Act took effect. This law requires most companies that practice algorithmic pricing to have a clear disclaimer next to the price stating: “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”

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

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