Colorado House discusses ban on AI-driven individual pricing

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(The Center Square) - The Colorado state House passed a bill Thursday to prevent companies from setting individualized prices for consumers or employees with AI surveillance. 

Individualized pricing is increasingly being explored by companies through tech such as artificial intelligence to predict what a given consumer is likely to spend, then charge the maximum. The Colorado legislation would ban this practice.

“I think everybody understands that our phones have become extensions of our brains,” Rep. Javier Mabrey (D-1) said during the House floor session Thursday. “We put our most intimate thoughts into our phones – our texts, our searches, our geolocation data. And the biggest companies in the world are collecting that data and selling it to other companies who are using it to decide how much to charge us as individuals for things like plane tickets, groceries, medicine when your kid is sick.”

“This isn't science fiction; this isn't the 'Minority Report,' " Mabrey said, referring to the 2002 sci-fi movie starring Tom Cruise. "This is real, and it's called surveillance pricing."

Colorado’s HB26-1210, the Prohibit Surveillance Price and Wage Setting bill, was passed with an amendment in the state House Thursday. It will head back to the state House for its third and final reading. If passed again, it will move onto the state Senate before landing on Democratic Gov. Jared Polis’ desk.

The Democrat-sponsored bill would potentially be the first of its kind to ban surveillance-based custom pricing in the U.S.

Large companies across industries have begun using surveillance-based individualized pricing in recent years. Walmart, Delta and ride sharing apps like Uber and Lyft are just a few examples. Marketplace recently reported how public pressure forced Instacart to temporarily abandon the practice. 

The Colorado legislature’s bill specified that surveillance data is the collection of a wide variety of personal information.

“Surveillance data is defined in the bill as data that is obtained through observation, inference, or surveillance of consumers or workers, and that is related to personal characteristics, behaviors, or biometrics of an individual or group,” read the bill summary. 

The ban would apply to consumer items and employee wages. Violations would be treated as deceptive trade practice in the state, which can bring up to a $20,000 penalty.

“What surveillance pricing does, is it rigs the market,” said Mabrey. “It doesn't adjust prices based on market conditions. It adjusts prices based on you, who you are, what you're going through, how desperate you might be at any given moment.”

While no representative disagreed with the wider point of the bill, some votes were cast against the measure out of concern that the language of the bill was not clear enough and could accidentally include other pricing practices.

The Colorado bill would be a major step up from New York state’s law passed in 2025 against individualized pricing. The New York law did not ban the practice but requires companies to label such items, “This price was set by an algorithm using your personal data."

“If we don't act now, this practice will only accelerate every year,” said Mabrey. The lawmaker added later, “The window to establish meaningful guardrails is now.”