Motivated by a fear that retailers will try to disadvantage consumers, more than 30 states are considering legislation that would regulate the use of customer information and digital algorithms to set prices. There are more than 100 bills introduced around the country, with at least five at play in Michigan. That’s a lot of potential regulation to keep track of, made harder by the fact that there are few agreed-upon definitions.
In Michigan, there are separate bills banning the practice of “dynamic pricing,” “surveillance pricing,” and more.
In one draft, dynamic pricing is defined as a pricing system that adjusts the price of food based on external conditions like the time of day, the day of the week, the weather or temperature, or customer attributes. An example might be: using an algorithm to automatically raise the price of ice cream on a hot day.
In another draft, surveillance pricing is defined as setting customized prices for different individuals or groups based on personally identifiable information collected through electronic surveillance technology. An example here might be: tracking a customer’s location to raise prices as a customer gets closer to the store.
To be fair, these definitions are not set in stone until either of these bills become law, which is very unlikely given the current legislative makeup. But they’re worth flagging as emerging issues. Technological advances aren’t slowing down, and retailers should be prepared to defend their pricing strategies.
Many of the bills, in Michigan and around the country, are motivated by the assumption that retailers and businesses are always out to exploit customers. In reality, retailers know that happy customers are return customers, and that it’s in the best interest of both retailer and consumer to set the right expectations about any shopping experience.
Retailers should take concerns about privacy and transparency seriously, and consumers deserve confidence that businesses are treating them fairly. But lawmakers should also be careful not to confuse every use of technology or data with exploitation. Pricing has always reflected supply, demand, timing, and consumer behavior—whether through coupons, loyalty programs, seasonal sales, or inventory management.
As legislatures debate these proposals, the challenge will be distinguishing between genuinely deceptive practices and the ordinary evolution of modern retail. If policymakers get that balance wrong, they risk creating vague rules that punish innovation, increase compliance costs, and ultimately make shopping less convenient and more expensive for consumers themselves.