Seattle Bans Grocery Stores From Using A.I. to Set Prices
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If an algorithm knows your income and charges you more than your neighbor, Seattle is about to make that illegal at the grocery store. The city council has just voted 7 to 2 to ban so-called surveillance pricing in grocery retail. According to the city, that makes Seattle the first city in the United States to stop grocery stores from using A.I. and personal data to set individual prices.
What Surveillance Pricing Is
With surveillance pricing, not everyone sees the same price. Retailers analyze data about their customers and use it to estimate how much a specific person is likely willing to pay. Seattle’s new Fair Pricing and Transparency Act names data such as browsing history, real-time location, inferred income, family size and health conditions, as the consumer advocacy group Consumer Reports lists. According to KOMO News, social media activity and even chatbot conversations are also off limits as a basis for pricing.
The ban covers large grocery retailers, both online and in physical stores. Traditional coupons and open discounts, such as those for seniors or veterans, are still allowed, but retailers will have to be more transparent about their discounts. When the law takes effect and what penalties apply have not yet been announced.
Up to 23 Percent More
Research by Consumer Reports shows the problem is real. In an analysis of Instacart, the large U.S. grocery delivery service, shoppers were shown different prices for identical products from the same store at the same time. The differences reached up to 23 percent on certain items, which the group says could cost a family more than $1,200 a year. It found something similar at Uber and Lyft, where different customers paid very different prices for the same ride within minutes.
A case involving the supermarket chain Kroger shows how much retailers know about their customers. One shopper requested their stored data and received a 62-page profile, including estimates of income, family size, education and gender. “Nobody should pay more for basic necessities because a data broker is quietly collecting information about what they’re searching for online,” said Grace Gedye of Consumer Reports.
Other States Got There First
Seattle isn’t alone. According to Consumer Reports, Maryland, Connecticut and New Jersey have already signed bans on surveillance pricing into law. Seattle’s rules for grocery retail go especially far, however. Mayor Katie Wilson announced the new rules together with the city council, and media reports say her formal signature is still pending.
What About Europe?
In the European Union, personalized pricing isn’t banned, but it has to be disclosed. Under the so-called Omnibus Directive, online retailers must tell customers when a price has been personalized for them based on automated decision-making. There is no comparable rule for shopping in physical stores, and whether anyone actually spots a disclaimer in the fine print is another question.
In Austria and Germany, too, supermarkets collect large amounts of shopping data through loyalty cards and apps. According to help.ORF.at, three out of four Austrians have a loyalty card. Apps from Billa, Spar, Lidl and others push personalized discounts and coupons, while shelf prices stay the same for everyone. The next debate is already on its way: the European Commission is expected to present its Digital Fairness Act later in 2026, which is set to target unfair personalization practices among other things.
