Surveillance Pricing and Dynamic Pricing: What General Counsels Need to Know

Surveillance pricing is quickly becoming a priority issue for general counsels as lawmakers and regulators scrutinize how companies use consumer data, algorithms and pricing technologies.

New Jersey's new grocery-focused ban adds to a growing state patchwork that already includes Maryland and Connecticut, while federal and state enforcers are advancing complementary theories under Federal Trade Commission (FTC) authority, the revived Robinson-Patman Act (RPA), and state Unfair or Deceptive (or Abusive) Acts or Practices (UDAP/UDAAP) laws.

Together, these developments signal that companies using variable pricing, loyalty programs, algorithmic revenue management or delivery fee structures should evaluate whether their pricing practices can be explained as lawful dynamic pricing or viewed as personalized pricing based on consumer data.

Understanding the Distinction: Dynamic Pricing vs. Surveillance Pricing

Regulatory focus and legal risk center on a critical distinction that general counsels must understand and communicate to their pricing, marketing and technology teams.

Dynamic pricing adjusts prices based on aggregate market signals: supply and demand, time of day, seasonal factors or general market conditions. Airlines, hotels, ride-sharing platforms and food retailers (through surge delivery pricing or end-of-day markdowns) have employed dynamic pricing for decades. Because it responds to market conditions rather than individual identity, dynamic pricing is generally lawful and not the primary target of current enforcement activity.

Surveillance pricing, the term regulators have adopted, uses personal data (browsing history, location data, demographics, inferred income, purchase history, device type) to set individualized prices. Under surveillance pricing, the price varies based on who the consumer is and their inferred willingness to pay rather than external market conditions. This practice is the focus of virtually every new enforcement action, legislative proposal and regulatory inquiry described below.

Training teams on this distinction is itself part of a company's defense. Companies that can document that they train their teams to engage in lawful dynamic pricing (not surveillance pricing) are in a materially stronger position when a regulatory inquiry arrives.

Federal Regulatory Landscape

FTC Enforcement and the April 2026 Advance Notices of Proposed Rulemaking (ANPRM)

The FTC has pursued surveillance pricing as a bipartisan enforcement priority. In July 2024, the FTC issued 6(b) orders to eight companies, which is a formal, legally binding demand issued under Section 6(b) of the FTC Act that requires companies to file written reports or answer specific questions, conduct broad market studies and share internal business data. In January 2025, an FTC report confirmed surveillance pricing is widespread. In November 2025, the U.S. Department of Justice (DOJ) settled with RealPage, restricting data sharing among clients of a shared pricing algorithm vendor and creating an important precedent for algorithmic collusion theories.

Under FTC Chairman Andrew Ferguson, the agency has scaled back broad rulemaking but intensified targeted enforcement: a $60 million settlement with a major grocery delivery platform (December 2025) for false "free delivery" claims; a $25 million GrubHub settlement (December 2024) for misleading cost representations; formation of a Food Supply Chain Security Task Force; and an ANPRM issued on April 14, 2026, covering total price disclosure, fee transparency, personalized pricing disclosure and unauthorized billing protections. Director of the FTC's Bureau of Consumer Protection Chris Mufarrige stated: "Clear and truthful pricing is essential to competitive markets … The Trump-Vance FTC is committed to addressing unlawful grocery delivery pricing."

In addition, junk fee enforcement and surveillance pricing enforcement are converging. The FTC's ANPRM on April 14, 2026, illustrates this directly. Though its core focus is unfair or deceptive fee practices in online food and grocery delivery, it also expressly asks whether delivery platforms disclose to consumers when they are charged personalized prices, folding surveillance pricing into what began as a fee-transparency inquiry. A July 9, 2026, letter from Sens. Richard Blumenthal (D-Conn.), Ben Ray Luján (D-N.M.) and Ron Wyden (D-Ore.) urges the FTC to finalize the rule and pursue delivery-app enforcement on both fronts, and a May 18, 2026, letter from a coalition of 16 state attorneys general led by New York and Tennessee went further, urging the FTC to both extend its existing fee rule to cover food delivery and issue a separate rule targeting personalized or surveillance pricing. The U.S. Congress is pressing on the surveillance pricing piece from multiple committees simultaneously: The U.S. House of Representatives Committee on Oversight and Accountability opened an investigation in March 2026 into artificial intelligence (AI)-driven surveillance pricing at travel and platform companies, and the House Committee on Energy and Commerce, under Ranking Member Frank Pallone (D-N.J.), launched a parallel inquiry in May 2026 into grocery and retail pricing practices. Taken together, these developments show regulators and lawmakers increasingly treating fee transparency and personalized pricing as two sides of the same problem, even though they remain analytically distinct.

Robinson-Patman Act Revival

The RPA, dormant since the 1990s, is back. The FTC brought its first RPA suits in a generation: one against a major wine and spirits distributor (December 2024) alleging discriminatory pricing harming independent liquor stores and another against a global food and beverage company (January 2025) alleging disproportionate promotional payments favoring a big-box retailer. Sens. Chuck Grassley (R-Iowa), Bernie Moreno, (R-Ohio) and Rep. Michael Rulli (R-Ohio), along with a national trade association representing independent grocers, all have urged continued RPA enforcement. Companies should review trade spend under RPA Sections 2(a), 2(d) and 2(e) for disproportionate promotional allowances favoring large chains over independents.

AI, Algorithmic Collusion and Third-Party Vendor Risk

AI pricing tools present distinct regulatory risks: 1) facilitation of unlawful price discrimination that has a disparate impact on protected classes, 2) algorithmic collusion where shared pricing tools among competitors create tacit coordination (the RealPage model) and 3) third-party liability, because outsourcing pricing to a vendor does not eliminate a company's own exposure and vendors can create shared liability across their client base. In Gibson v. Cendyn Group (9th Cir., August 2025), the first appellate ruling on algorithmic pricing antitrust, the court held that shared vendor use alone does not establish collusion but emphasized this is a fact-specific inquiry, not a safe harbor. The DOJ signaled in June 2026 that criminal enforcement of algorithmic pricing collusion remains on the table.

Executive Branch Activity

Executive Order 14364 (December 2025) established DOJ and FTC Food Supply Chain Security Task Forces, directed the U.S. Attorney General (AG) to pursue criminal proceedings where collusion is found, and requires congressional briefings at six months and one year. Food pricing and affordability are being framed as a national security matter, giving this issue unusual political durability regardless of which party controls the White House.

Senate Judiciary Committee Hearing and Anticipated Hawley Legislation

On August 4, 2026, the U.S. Senate Committee on the Judiciary Subcommittee on Crime and Counterterrorism held a hearing, "Your Data, Their Profit: The Consumer Cost of AI Surveillance Pricing," chaired by Sen. Josh Hawley (R-Mo.), who described AI-driven surveillance pricing as the "unholy trinity of everything America hates" and cited a major grocery retailer's reported $500 million in revenue from selling harvested consumer data. Witnesses testified that companies increasingly use extensive personal data, including browsing history, location, purchase history and inferred willingness to pay, to set individualized prices through opaque algorithms, citing examples such as a reported 230 percent fare increase for a consumer booking funeral travel on a major airline and continued scrutiny of a major delivery platform's pricing experiments. Most witnesses endorsed new federal legislation, including the One Fair Price Act (S. 3387) and Stop Price Gouging in Grocery Stores Act (H.R. 4966), pointed to New Jersey's Fair Price Protection Act as a model and called on the FTC to reopen its surveillance pricing study. However, one witness offered a dissenting view that personalized pricing can expand access and lower costs for some consumers and that policy should instead target monopolistic conduct rather than the pricing tool itself. Following the hearing, Sen. Hawley stated that he expects to introduce his own surveillance pricing legislation "soon."

For general counsels, the immediate takeaway is threefold: 1) Companies should assume they will need to explain their pricing data inputs and algorithmic methodology to Congress, not just to regulators or in litigation, which means internal documentation and governance must be defensible at a hearing room level of scrutiny, 2) the political framing has shifted from a niche data privacy concern to a populist consumer protection issue with genuine bipartisan energy, which means the strategy of running out the clock on state-by-state bills may not hold at the federal level, and 3) the hearing exposed specific factual examples – loyalty program data monetization, location-triggered in-app pricing and delivery platform pricing experiments – that will now form the legislative record against which any future federal bill's scope will be measured, so companies engaged in any of those practices should treat them as immediate compliance priorities rather than edge cases.

The State Legislative Patchwork

The state legislative landscape is expanding rapidly. As of late July 2026, more than 40 surveillance pricing bills are pending across 24-plus states, and 28 digital shelf label-specific pricing bills are pending across 16 states (digital shelf labels are small electronic screens placed on store shelves to show product prices and details). Four states have enacted laws, and a fifth is likely imminent.

New Jersey: Fair Price Protection Act

New Jersey's Fair Price Protection Act, signed on July 23, 2026, makes it an unlawful practice under the Consumer Fraud Act for a retail food store or third-party grocery delivery platform to use personalized algorithmic pricing, surveillance pricing or any pricing strategy that varies grocery prices based on personal data, including browsing history, real-time location, inferred family size or income, biometric data, genetic information or protected class status. The law covers both in-store and online/delivery sales.

The Act expressly preserves loyalty programs, bona fide group discounts (teachers, veterans, seniors) and price differences based on actual or reasonable operational cost differences. Location data may still be used for fulfillment and assessing local supply and demand but not to profile consumers or infer protected-class status.

The law also imposes a one-year moratorium on installation of new electronic shelf labels (ESL) while the New Jersey Innovation Authority studies ESL impacts. Enforcement lies with the New Jersey AG, who can recover penalties up to $50,000 per violation or actual damages (whichever is greater), plus restitution, treble damages and cease-and-desist orders. Consumers may also bring private legal action. The law takes effect approximately one year after enactment.

Other Enacted Laws

• Maryland: Bans surveillance pricing for food retailers and delivery platforms, effective October 1, 2026.
• Connecticut: Prohibits surveillance pricing and mandates a consumer-facing disclosure label: "THIS PRICE WAS INCREASED BY A PRICE SETTING DEVICE USING YOUR PERSONAL DATA." The law takes effect on October 1, 2026.
• New York: The Algorithmic Pricing Disclosure Act (effective November 2025) requires disclosure when personalized algorithmic pricing is used. The law survived a First Amendment challenge in the U.S. District Court for the Southern District of New York.
• New York: The One Fair Price Act (S.8623B/A.9349B), championed by AG Letitia James, passed the Legislature on June 10, 2026, and awaits Gov. Kathy Hochul's signature. If signed, it would replace the disclosure regime with an outright ban and impose penalties up to $5,000 and $20,000 for subsequent violations, though it would not include a private right of action.
• Vermont: H.942 permits ESLs but bans intraday price increases except for documented pricing errors.

State AG Enforcement: The Near-Term Front Line

Near-term risk from state AGs may exceed federal enforcement risk. AGs can move first and fastest using existing broad UDAP/UDAAP authority; no surveillance-pricing-specific statute is required.

New York AG James demanded answers from a major delivery platform in January 2026 after Consumer Reports found 23 percent price differences in the platform's pricing experiments. The delivery platform ended those tests under AG pressure. California AG Rob Bonta launched a surveillance pricing sweep the same month, sending inquiry letters to grocers, hotels and retailers. Multistate coalitions are pooling resources and coordinating enforcement.

Critically, AG findings and settlements often become the factual record that plaintiffs' firms cite in follow-on private class action litigation, creating a dual exposure risk from a single underlying practice.

Electronic Shelf Labels and the Data Privacy Intersection

ESLs (also known as digital shelf labels) are a political flashpoint even though they are a legitimate, beneficial technology. ESLs display prices, update instantly, communicate allergen and nutrition information, and alert staff to out-of-stock items. Industry data shows 92 percent of ESL price changes occur between 2 and 5 a.m., with the remaining 8 percent representing waste-reduction markdowns. ESLs can cut food waste by up to 21 percent. They address a real operational challenge: A typical store carries 32,000 stock keeping units and changes more than 7,000 paper tags weekly.

Nonetheless, 28 bills in 16 states target ESL bans or restrictions, and the political risk is independent of their factual merits, as New Jersey's moratorium and Vermont's conditions illustrate. Companies deploying ESLs should document legitimate use cases contemporaneously to build a defensible record.

More broadly, pricing practices, data privacy and consumer protection law are converging. State comprehensive privacy laws impose data collection requirements, automated decision-making provisions may require disclosures or opt-outs, and surveillance pricing inherently depends on collecting the very personal data these laws regulate. Loyalty programs deserve particular attention (even in New Jersey, where the legislation specifically preserves them): Loyalty data (detailed shopper profiles including income, family composition and purchasing patterns) is precisely the kind of data regulators are targeting. Companies should audit loyalty program data practices under attorney-client privilege.

What Should Companies Do Now?

General counsels should consider the following concrete compliance and risk mitigation steps:

1. Audit pricing algorithms across all sales channels (in-store, e-commerce, delivery, marketplace) for legal exposure under current and pending surveillance pricing laws.
2. Evaluate vendor contracts to understand what data pricing tool vendors use, whether it is shared across competitors (creating RealPage-style shared liability exposure) and where contractual indemnification gaps exist.
3. Implement transparency measures including Connecticut-style consumer disclosure labels where required, and consider voluntary adoption elsewhere as a risk-mitigation strategy.
4. Conduct disparate impact assessments to identify whether pricing algorithms produce proxy discrimination against protected classes.
5. Build an AI governance framework with human oversight, clear accountability and audit trails for algorithmic pricing decisions.
6. Train teams for legal, compliance, marketing, pricing and technology on the legal distinction between lawful dynamic pricing and risky surveillance pricing, which by itself can serve as a key defense.
7. Document legitimate business justifications contemporaneously, for every pricing differential, including ESL deployment rationales.
8. Assign tracking responsibility for the more than 40 pending state bills and emerging state AG activity relevant to the company's geographic footprint.
9. Prepare an incident response plan specifically for pricing-related regulatory inquiries, so the company is ready to respond promptly and consistently when (not if) a state AG or an FTC inquiry arrives.

Holland & Knight's Consumer Protection Defense and Compliance Team regularly advises retailers, food companies, delivery platforms and technology companies on surveillance pricing compliance, FTC and state AG investigations, algorithmic pricing governance, and the intersection of data privacy and pricing practices.

For questions about the developments discussed in this alert or assistance developing a compliance program tailored to your company's specific pricing practices and geographic footprint, please contact the authors or your Holland & Knight representative.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.