The proposed California surveillance pricing ban is getting a local stress test in San Francisco, where the Board of Supervisors has delayed a resolution supporting AB-2564 after objections from the San Francisco Chamber of Commerce, according to the San Francisco Examiner and the Electronic Frontier Foundation.
AB-2564 would prohibit businesses from setting customized prices for goods based in whole or in part on personally identifiable information gathered through electronic surveillance, according to the bill text. The measure also includes carve-outs for price differences tied to higher service costs, discounts offered to retain customers who are trying to cancel, and broadly available discounts such as senior pricing, early-bird specials and loyalty programs.
The Electronic Frontier Foundation told supervisors in a letter that the Chamber’s objections misread the bill and overstate the consumer benefits of individualized pricing. EFF is urging San Francisco’s city government to back the state legislation, arguing that consumers should not have to trade privacy for a fair price.
What is surveillance pricing?
Surveillance pricing is the use of personal data to charge different people different prices for the same product or service. The data can include details about behavior, purchases, location, communications or other signals collected by companies and data brokers, then processed by automated systems to estimate what a particular person or group may be willing to pay.
Cory Doctorow, writing at Pluralistic, argues that artificial intelligence makes the practice cheaper and more precise because statistical systems can sort customers into fine-grained groups and test which prices each group will accept. The point does not require a manager to write down an ugly rule, such as charging desperate parents more. A system can infer willingness to pay from observed behavior and tune prices accordingly.
The Federal Trade Commission has studied surveillance pricing, and Doctorow cited FTC research summaries as evidence that online sellers have charged parents of newborns more for thermometers ordered in the middle of the night. The policy fight is therefore less theoretical than the industry would prefer. Dynamic pricing already exists; AB-2564 targets the version powered by electronic surveillance and personal identification.
What does the San Francisco Chamber say?
According to EFF’s summary of the dispute, the San Francisco Chamber of Commerce warned that AB-2564 could create uncertainty and interfere with ordinary discounting practices. The examples raised in the fight include senior discounts for movie tickets and cheaper offers made to customers who call to cancel service.
EFF’s response is that those examples are already handled by the bill’s exceptions. The group says AB-2564 allows price differences when servicing a customer costs more, when a business is trying to keep a canceling customer, and when discounts are based on criteria open to broad groups or loyalty program participants.
EFF also rejected the argument that surveillance pricing should be tolerated because it might lower prices for some consumers. In its letter, the group says evidence does not support sweeping claims that the practice benefits shoppers overall. Its broader objection is sharper: if the lower price depends on surrendering privacy, then privacy becomes a luxury product.
Why San Francisco’s resolution matters
City resolutions do not make state law, but they can help show legislators that major local governments support a bill. Doctorow wrote that San Francisco supervisors had been close to backing AB-2564 before the Chamber’s letter slowed the vote.
The bill has other supporters. Doctorow pointed to EFF and Consumers Union among the organizations backing the measure. The next fight is political, not technical: whether California lawmakers accept a ban on surveillance-based price discrimination, or leave companies room to keep testing exactly how much each customer can be made to pay.
This story draws on original reporting from Pluralistic.
