Reed Seeks to Ban Exploitative AI-Enabled Price Discrimination

PROVIDENCE, RI -- As major retailers begin using artificial intelligence (AI) to make so-called ‘surveillance pricing’ or ‘personal pricing’ more intrusive, unfair, and opaque, U.S. Senator Jack Reed is seeking to prevent companies from unfairly charging consumers more based on personal data algorithms. Personalized or individualized price discrimination broadly refers to the practice of retailers “using troves of personal data to set individualized prices. As a result, people are paying different amounts for the same exact product, just because businesses are better equipped to infer who will pay more.” During a visit to the Bom Café in Providence today, Senator Reed joined café owner Rosie Santana and Nina Harrison, Policy Director of the Economic Progress Institute (EPI), for a conversation about the importance of marketplace fairness and preventing unfair AI-enabled cost manipulation. “Consumers deserve transparent pricing and equal treatment, not hidden technology that misuses their personal data to set different prices for the same item and charge some shoppers more than others. AI is a powerful tool, but it presents real and pressing challenges. This is one of them and Congress needs to take thoughtful, concrete steps to ban exploitative AI-enabled price discrimination and ensure fairness in the marketplace. Whether it’s food, coffee, or basic staples, no family should pay hidden premiums and higher prices for the same product based on their personal online data that has been collected without their knowledge or consent,” said Senator Reed. The Economic Progress Institute recently released its biennial Rhode Island Standard of Need report offering a snapshot of what it costs for individuals and families to afford a no-frills life in Rhode Island. The 2026 report calculates monthly and annual budgets for housing, food, transportation, health care, child care, and other essentials—and shows that nearly 40 percent of Rhode Island households may not have enough income to meet their basic needs. “Rhode Islanders literally cannot afford to have surveillance pricing in this state. They cannot afford for companies to take their personal information and use that personal information against them to raise prices and make things even less affordable. Working families can’t afford it. We can't allow it. And that’s why I’m so grateful to Senator Reed for doing this work and raising this issue to try to get ahead of it and prevent surveillance pricing before it harms Rhode Islanders,” said EPI’s Policy Director Nina Harrison. An investigation by Consumer Reports and Groundwork Collaborative found that popular grocery apps like Instacart used AI-enabled pricing experiments to inflate the grocery bills of some users . AI-powered algorithms led to some shoppers getting charged $3.99 for a box of Wheat Thins, while another shopper from the same store at the same time was charged $4.89. Based on how much Instacart estimates a typical household of four spends on groceries, the average price variations observed could translate into a cost swing of $1,200 per year on food alone. Senator Reed says there should be federal guardrails and clear, durable consumer protection laws in place that keep pace with the needs of Americans and rapidly-evolving technology. Businesses have long used algorithmic pricing to determine how much consumers are willing to pay for products and services. But those systems set general prices for the masses based on supply, demand, competitor prices, and other broad data points. These new exploitative AI-enabled algorithms use personal data as a tool for price discrimination to try to ensure every consumer pays the maximum. As AI becomes more common-place, more companies are starting to experiment with ‘personalized’ or ‘surveillance’ pricing, including the use of personal information such as browsing history, demographics, or behavioral patterns, and companies typically collect and analyze the data using AI and algorithms to charge different prices for different customers, based on a range of factors, such as their income, zip code/geolocation, mouse movements, or other personal data. Reed is urging Congress to take bipartisan action to crack down on algorithmic price discrimination and prevent companies from using non-public data and artificial intelligence to unfairly squeeze every last penny out of consumers. “If federal lawmakers fail to act, online shoppers will be at increased risk of price gouging, cost manipulation, and data privacy threats as more businesses use AI to target the finances, privacy, and equality of consumers,” said Senator Reed. “To ensure a healthy and prosperous Rhode Island, we must ensure working families can afford basic necessities. I will work across the aisle to ban AI-enabled price discrimination while ensuring companies can continue offering targeted discounts, promotions, rewards, loyalty and membership benefits, or contextual pricing.” Many consumers are already being charged more money through ‘dynamic pricing’ for things like rideshares, airline tickets, and hotels whose prices can go up when demand is high and change based on timing and location. But even dynamic pricing is a concept that raises prices for all consumers, not just certain individuals. Senator Reed is urging Rhode Islanders who have been impacted by surveillance pricing or concerned about the ramifications of price discrimination to contact his office and share their views .