As artificial intelligence increasingly shapes the way companies set prices, Joseph Lagana and Joseph Cryan in the Senate and Chigozie Onyema and William Sampson in the Assembly have proposed new legislation that would prohibit grocery retailers from using high-tech algorithms to set individualized prices for New Jersey’s customers.
The Fair Protection Act is part of a growing national effort to address concerns over “surveillance pricing,” a practice where businesses use consumer data and automated systems to personalize prices for individual shoppers.
What Is Surveillance Pricing?
Retailers have long used dynamic pricing to adjust costs based on supply and demand. Surveillance pricing is a strategy where companies monitor customers’ behavior, data, and context in real time to adjust prices dynamically, often showing different prices to different people for the same product or service. Companies, often third parties retained by retailers, collect and analyze data such as:
- Browsing history and search behavior
- Location
- Device type (phone vs. desktop)
- Purchase history
- Time of day or demand
- Cookies and tracking data
Algorithms then estimate how much a specific person is likely willing to pay, and the system may raise or lower the price accordingly. Alternatively, the system may offer promotions and other offers to certain consumers.
As surveillance pricing continues to mature and deployment spreads, regulators have raised concerns that surveillance pricing could lead to hidden price discrimination, exploitation of sensitive data, and loss of market transparency.
In 2024, the Federal Trade Commission (FTC) launched a formal investigation into companies that build pricing algorithms. The agency’s initial findings suggest companies can use extremely granular data, such as mouse movements, shopping behavior, and abandoned carts, tailor prices or promotions for specific users.
“Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices,” said FTC Chair Lina M. Khan. “Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
NJ Lawmakers Step Up
New Jersey is now the latest state to address surveillance pricing. The “Fair Price Protection Act” would prohibit a retail food store or third-party grocery delivery platform from charging different prices to different consumers for the same or substantially similar grocery item or service when the price difference is based, even in part, on surveillance-based price setting using consumer data.
Under Senate Bill 3717/Assembly Bill 4523, “surveillance-based price setting” is defined as offering or setting a customized price for a product or service for a specific consumer or group of consumers based on information collected through electronic surveillance technology, including sensors, cameras, device tracking, biometric monitoring, or other forms of observation or data collection capable of gathering information about a consumer’s behavior, characteristics, location, or other personal attributes.
The bill carves out exceptions for true cost-based differences, group discounts like teacher/senior/veteran/student discounts, and loyalty-program discounts. These differences in price are allowed provided that eligibility conditions are clearly and conspicuously disclosed; discounts are offered uniformly to consumers who meet the criteria; surveillance data used solely to administer a bona fide discount is not used for any other purpose; and loyalty programs do not charge different prices for points or similar nonmonetary value for the same or substantially similar product or service.
Supporters of the proposal argue that it would improve transparency in the marketplace and prevent hidden forms of price discrimination. Algorithmic systems that analyze consumer behavior, location, or purchasing history may unintentionally—or deliberately—charge higher prices to certain groups of shoppers.
Senate Bill 3717 was introduced in the Senate on March 5, 2026 and referred to the Senate Commerce Committee. Meanwhile, Assembly Bill 4523 was introduced in the Assembly on March 9, 2026 and referred to the Assembly Consumer Affairs Committee. If the measure advances, New Jersey could join a growing group of states experimenting with policies aimed at bringing greater oversight to AI-driven commerce. The outcome of these efforts may shape how retailers across the country deploy algorithmic pricing tools in the years ahead.
