Calls to Rein in Algorithmic Pricing Grow Louder

Generally speaking, algorithmic pricing – sometimes known as dynamic pricing – is the practice by which businesses use automated algorithms to set prices, often instantaneously, for goods or services in the marketplace. For example, airlines typically use these types of algorithms to adjust seat prices in real-time while air travelers are booking flights.

While merchants have always adjusted prices based on numerous factors, the incorporation of artificial intelligence (AI) to alter prices instantly, based on mass amounts of data about shoppers and current market conditions, have led to frustrations by consumers who feel the practice is deceptive and economically unfair. And state lawmakers are listening.

During the current legislative session, bills have been introduced in numerous states, including California, Illinois, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and Tennessee that seek to prohibit, restrict or bring transparency to the practice of using dynamic pricing to recommend product price points or actually set them. In the Volunteer State, for example, legislation was introduced this year that would prohibit most businesses from using algorithmic pricing to set personalized prices on goods and services for consumers.

State Affairs will continue to monitor these bills and assess their impact across all segments of NPGA membership – manufacturers to marketers. For more information, contact NPGA’s Senior Director of State Advocacy & Affairs, Jacob Peterson.