Frank Pallone

After a smattering of states have taken steps to ban retailers from setting prices based on an individual consumer’s behavior — known as surveillance pricing — the feds are getting into the act.

U.S. Rep. Frank Pallone, D-6th Dist., launched an inquiry into whether companies are using personal data to charge customers different prices for the same products.

He said it’s all about affordability.

“Consumers deserve to know if businesses are using their personal information to manipulate the prices they pay or experiment with algorithms to set the prices they see,” he said.

Pallone, ranking member of the House Energy and Commerce Committee, sent letters to 25 retailers and grocery chains with pages of questions asking for details on how they use AI and other algorithmic pricing systems. The goal is to see if the companies use information gleaned from the use of an app, loyalty program or a consumer’s browning history to change prices based on a customer’s perceived willingness to pay.

Lawmakers in New Jersey are already debating several measures that would ban surveillance pricing and electronic shelf labels.

The “Fair Price Protection Act,” said to be supported by Gov. Mikie Sherrill, would prohibit personalized algorithmic pricing, surveillance pricing “or any pricing strategy that determines or varies the sale price of groceries and other foodstuffs based, in whole or in part, on personal data.”

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The use of electronic shelf labels, or digital price tags, would be considered a violation of the Consumer Fraud Act if the labels use any of the pricing strategies that use personal data.

Any kind of surveillance pricing could lead to fines as high as $50,000 in addition to Consumer Fraud Act violations of up to $10,000 for a first offense and up to $20,000 for any subsequent offense if the bill becomes law.

Pallone said customers deserve to know the scope of what companies are doing to track their data and possibly use it to set individualized pricing. It’s all about privacy, fairness and transparency, he said.

“It’s all about an effort to find what needs to be done,” he said, noting that he could introduce legislation depending on what the inquiry reveals.

“Prices are out of control,” Pallone said.