How much will you pay? Colorado lawmakers say companies are surveilling us to set individualized prices

Most of us belong to at least one rewards or loyalty program to get discounts.

But some state lawmakers in Colorado say, in many cases, we're giving up more than we get.

They say companies are using our browsing and buying history to set individualized prices on everything from groceries to plane tickets based on what they think a person can afford or is willing to pay.

It's called surveillance pricing, and Democratic state Reps. Javier Mabry and Jennifer Bacon plan to put a stop to it.

"You can't budget when the price of the same item changes based on who's looking at it. You can't plan when your paycheck is determined by an algorithm you can't see," Mabrey told the House Business Affairs committee.

He says, instead of the law of supply and demand, companies are using our individual pain points.

"What you are going through, how desperate you may be at any given moment — that's not the free market," he said.

He says companies are surveilling everything from the websites we visit and the products we purchase to where we live and what we do for a living. He says all that information is analyzed by a price-setting algorithm that generates a price tailored to each individual.

"All of us are playing against a supercomputer when we go into the grocery store," Bacon said.

She and Mabrey are sponsoring a bill meant to level the playing field. It makes the use of surveillance data and algorithms to set individual prices a deceptive trade practice with fines of up to $10,000.

The Colorado Cross Disability Coalition is among those supporting the measure.

"Without guardrails, companies may have both the technical ability and the financial incentive to charge people with disabilities a higher price, just because their needs are predictable and unavoidable," Elsa Gartenmann with the coalition told the committee.

Business groups say the bill will do more harm than good.

"These are not predatory practices; they are pro-consumer tools businesses use every day to compete for customers and help people stretch their budget," said Rebecca Hernandez with the Denver Chamber of Commerce.

Rachel Beck with the Colorado Chamber of Commerce says businesses will likely scale back or eliminate targeted coupons: "Our businesses estimate that you're excluding millions of customers from eligibility for retail discounts."

Mabrey isn't buying it.

"The largest companies in the world are not investing millions of dollars into this technology to make less money. Every year, the data becomes more granular, and the algorithms get more sophisticated," he said. "The window to establish meaningful guardrails is now; before this becomes so embedded in our economy that it becomes impossible to unwind."

The bill passed the state Business Affairs Committee after testimony from some 50 people, including people with medical issues like gluten intolerance, for example, who say it makes them more vulnerable to surveillance pricing.

The bill not only prevents companies from using surveillance data to set prices but wages, too. Sponsors say it does not apply to reward programs like Ibotta that people sign up for, knowing their data is tracked. This is the second year lawmakers are trying to pass such a bill into law.