Source: Fortune
Summary
U.S. consumers are growing frustrated with the increasing use of digital price tags and AI-driven pricing tools by retailers and restaurants. Terms like “dynamic pricing” and “surveillance pricing” are causing confusion and concern. Walmart CEO John Furner stated that digital price tags do not use personal data to set prices, but consumers remain skeptical. Lawmakers are considering regulations on algorithmic pricing, and the FTC has warned businesses about the risks of not disclosing how personal data is used. Some retailers, like Target, have faced lawsuits over alleged price discrimination based on customer data.
Our Reading
The announcement sounds familiar.
Consumers are frustrated with digital price tags and AI pricing tools.
Companies say they don’t use personal data to set prices.
Lawmakers are considering new regulations on algorithmic pricing.
Companies face lawsuits over alleged price discrimination.
Author: Evan Null
U.S. Consumers and the Rise of Digital Pricing
U.S. consumers are increasingly frustrated with the use of digital price tags and AI-driven pricing tools by major retailers and restaurant chains. These technologies, which allow for dynamic and personalized pricing, have sparked confusion and anger among shoppers. Terms like “dynamic pricing” and “surveillance pricing” are being used more frequently, but many consumers are unsure how these systems work or how their personal data is being used.
Walmart CEO John Furner has stated that digital price tags do not use personal data to set prices, but consumers remain skeptical. The company claims that prices are set based on the product, not the customer, but many shoppers are still concerned about the lack of transparency. This has led to speculation and false claims, such as the idea that digital price tags scan shoppers’ faces or cellphones to set individualized prices.
Lawmakers are taking action to address these concerns. At least 30 states have considered pricing bills this year, including measures that address algorithmic and personalized pricing. The Federal Trade Commission has also proposed an enforcement policy warning businesses that failing to disclose their use of personal data to set individualized prices could violate consumer protection laws.
Personalized pricing, also known as “surveillance pricing,” involves offering different prices and discounts based on customer data such as location, income, and web-browsing habits. While some retailers have faced lawsuits over alleged price discrimination, others claim they do not use personal data to set prices. For example, Target settled a lawsuit in 2022 over allegations that its app displayed lower prices before shoppers entered stores and raised them once they were inside.
As digital pricing tools become more widespread, the tension between companies and consumers is likely to continue. While companies argue that these technologies help keep prices up to date and improve efficiency, consumers remain wary of the lack of transparency and the potential for misuse of personal data.
Dynamic Pricing and Its Impact
Dynamic pricing involves adjusting prices in response to changing market conditions, such as supply and demand. Airlines and ride-sharing companies like Uber use this strategy to set prices based on factors like time of day and demand. However, the use of dynamic pricing in retail settings, particularly with digital price tags, has raised concerns among consumers.
Decodo, a web data company, tracked price changes in 2025 across a range of products, including electronics, clothing, and home improvement supplies. The data showed that about half of the price changes were decreases, which contradicts the common belief that dynamic pricing only raises prices. This suggests that dynamic pricing can have both positive and negative effects on consumers.
Despite these findings, many consumers remain skeptical about the use of dynamic pricing in retail. They are concerned that prices may be manipulated based on personal data or other factors that they are not aware of. This has led to increased scrutiny from lawmakers and regulators, who are considering new rules to protect consumers from potential abuses.
While dynamic pricing can help businesses respond to market conditions more effectively, it also raises questions about fairness and transparency. As more retailers adopt this strategy, it will be important for companies to communicate clearly with consumers about how pricing decisions are made and what data is used.
The use of dynamic pricing in retail is still relatively new, and its long-term effects on consumers and businesses are not yet fully understood. As the technology continues to evolve, it will be important for both companies and regulators to work together to ensure that pricing practices are fair and transparent.
Digital Price Labels and Consumer Concerns
Digital price labels, which allow stores to update shelf prices electronically, are becoming more common in the U.S. These labels, which have been used in Europe and Asia for years, are now being adopted by major retailers like Walmart and Whole Foods. However, their increasing use has raised concerns among consumers and labor unions.
Consumer advocates have expressed worries that digital price labels could be used for surge pricing or personalized pricing, which involves setting different prices based on customer data. Some labor unions have also opposed the technology, arguing that it could lead to job losses and increased surveillance of workers.
Despite these concerns, digital price labels do not necessarily lead to higher prices during periods of strong demand. Retailers typically update electronic shelf prices on a regular schedule, often weekly, to maintain consistency and avoid confusing customers. Research has shown that surge pricing, which is common in industries like airlines and ride-sharing, is rare in grocery and general merchandise retail.
As digital price labels become more widespread, it will be important for retailers to address consumer concerns and ensure that pricing practices are fair and transparent. This includes providing clear information about how prices are set and what data is used to make pricing decisions.
The adoption of digital price labels is part of a broader trend toward the use of technology in retail. While these tools can improve efficiency and reduce costs, they also raise important questions about privacy, fairness, and consumer trust. As the technology continues to evolve, it will be important for retailers to balance innovation with transparency and accountability.
Personalized Pricing and Data Privacy
Personalized pricing, also known as “surveillance pricing,” involves offering different prices and discounts based on customer data such as location, income, and web-browsing habits. This practice has drawn the attention of regulators and consumer advocates, who are concerned about the potential for misuse of personal data.
The Federal Trade Commission has warned businesses that failing to disclose their use of personal data to set individualized prices could violate consumer protection laws. In 2025, an FTC staff report found that intermediaries offering tools that can tailor prices and promotions worked with at least 250 clients, including grocery and clothing retailers. This has led to increased scrutiny of how companies use customer data to set prices.
Lawmakers in Maryland, New Jersey, and Connecticut have enacted restrictions on using shoppers’ personal data to determine what they pay. These laws focus on groceries, with exceptions for certain loyalty discounts and promotional offers. Connecticut’s legislation covers a broader range of retail purchases, reflecting growing concerns about the use of personal data in pricing decisions.
Some retailers have faced lawsuits over alleged price discrimination based on customer data. For example, in 2022, California prosecutors sued Target, alleging that the retailer’s app displayed lower prices before shoppers entered stores and raised them once they were inside. Target agreed to a $5 million settlement and a ban on using geofencing technology to increase prices.
While some retailers claim they do not use personal data to set prices, the lack of transparency has led to increased consumer skepticism. As the use of personalized pricing continues to grow, it will be important for companies to communicate clearly with consumers about how pricing decisions are made and what data is used.
AI and Algorithmic Pricing in Retail
Algorithmic pricing uses software to recommend or automatically set prices, and AI can help these systems identify patterns in sales, competitors’ prices, and other data to predict demand and estimate how different prices would affect sales and profits. This technology is being adopted by businesses across industries, including retail, where it is used for both dynamic and personalized pricing.
A survey by Simon-Kucher, a global consulting company, found that 41% of business leaders in 28 countries and 39 industries use AI software to gather market intelligence, including competitors’ prices. Another 28% use it for “real-time price optimization,” which involves choosing prices that advance business goals such as increasing profits or attracting shoppers.
The National Retail Federation has stated that algorithmic pricing is a new method of doing what retailers have always done: monitor and adjust prices based on supply, demand, seasonality, and other factors. However, some lawsuits have alleged that pricing algorithms are being used to undermine competition.
In 2023, the FTC brought a lawsuit against Amazon, challenging an algorithmic tool called Project Nessie. The agency alleged that the tool was used to identify products whose prices could be raised with competitors likely to follow, generating more than $1 billion in excess profits. Amazon denied the allegations, saying the tool was scrapped before the lawsuit.
As AI continues to play a larger role in pricing decisions, it will be important for companies to ensure that their practices are fair and transparent. This includes providing clear information about how pricing decisions are made and what data is used to set prices. As the technology evolves, regulators will need to keep pace with the changes to protect consumers and ensure fair competition.
