California Is Investigating Companies That Spy on You to Charge You More

TL;DR: On January 27, 2026, California Attorney General Rob Bonta launched an investigation into "surveillance pricing": the practice of companies using your personal data to charge you a different price than the person standing next to you. Inquiry letters went out to retailers, grocery chains, and hotels. A 2025 Consumer Reports investigation found Instacart charged some customers up to 23% more for the same groceries. The FTC already identified at least 250 businesses using this tactic. New York now requires a label that says "THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA." California's investigation could lead to CCPA enforcement actions.

Same Product, Different Price. Based on You.

Here's the concept stripped to its core: a company collects your browsing history, shopping habits, location, and demographics. Then it feeds that data into an algorithm that decides how much to charge you specifically for a gallon of milk, a hotel room, or a pair of sneakers.

Not a sale. Not a coupon. A price calculated based on what the algorithm thinks you're willing to pay.

Attorney General Bonta put it plainly: "Consumers have the right to understand how their personal information is being used, including whether companies are using their data to set the prices that Californians pay" for groceries and other goods ^[1].

The California Department of Justice is now sending inquiry letters to prominent retailers, grocery chains, and hotel companies with significant online presences. The letters demand companies explain how they use consumer data to set prices, what pricing experiments they've run, and what they've told customers about it ^[1].

The Instacart Problem

This isn't theoretical. Consumer Reports ran an investigation in 2025 and found that Instacart grocery prices varied by as much as 23% per item from one customer to the next. The same product. The same store. Different customers saw prices that ranged by seven cents to $2.56 per item ^[1][2].

After getting caught, Instacart said it stopped offering the pricing technology. But the investigation exposed the mechanism: the app was using customer data (what you bought before, where you live, how often you ordered) to calculate individualized pricing in real time.

Instacart isn't alone. The FTC issued orders to eight companies in July 2024 demanding information about surveillance pricing practices: Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey ^[3]. These aren't retailers. They're the companies that sell surveillance pricing technology to retailers. The FTC found at least 250 businesses across grocery, apparel, health and beauty, home goods, convenience stores, and hardware stores had adopted these systems ^[4].

What They Track

The FTC's investigation found that surveillance pricing systems use an absurd range of personal data to set prices ^[4]:

Mouse movements on a webpage: how you hover and scroll signals interest
Abandoned cart items: what you almost bought tells them your price threshold
Precise location: your ZIP code affects what they think you'll pay
Browser history: comparing prices elsewhere signals price sensitivity
Purchase history: frequent buyers get treated differently than new ones
Device type: iPhone users have historically been shown higher prices
Demographics: age, income estimates, household composition

Every click, every scroll, every second you linger on a product page is being measured and fed into pricing algorithms. The system doesn't just know what you want. It's calculating the maximum you'll pay before you walk away.

The Law California's Using

Bonta's investigation isn't just fact-finding. It has teeth.

The California Consumer Privacy Act contains a "purpose limitation principle" that restricts how businesses can use your personal data. Companies can only use your information for purposes that are "consistent with the reasonable expectations of consumers" ^[1]. If you gave a grocery delivery app your address to receive deliveries, you probably didn't expect it to use that address to calculate how much extra you'd pay for eggs.

California also enacted AB 325, which updated the state's anti-monopoly codes to ban anti-competitive algorithmic pricing schemes ^[5]. That means if multiple retailers use the same pricing algorithm from the same vendor (say, PROS or Revionics) and that shared technology leads to coordinated price inflation, that could be an antitrust violation on top of a privacy one.

The AG's office has already shown it's willing to enforce. Recent CCPA settlements include $1.55 million against Healthline Media, $1.4 million against Jam City, $530,000 against Sling TV, and $500,000 combined against Tilting Point Media and DoorDash ^[1].

New York Already Labels It

California is investigating. New York went a step further.

On November 10, 2025, the Algorithmic Pricing Disclosure Act took effect across New York State. Every business using personal data to set individualized prices must now display a label near the price tag that reads: "THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA" ^[6].

Violations cost $1,000 per offense. No cap on total penalties. And Attorney General Letitia James set up a complaint form on day one ^[6].

The question hanging over all of this: if companies have to disclose that they're using your data to set prices, will customers accept it? Or will the disclosure itself be enough to kill the practice?

The Discrimination Problem

Surveillance pricing isn't just a privacy issue. It's a discrimination issue.

The FTC's staff analysis noted that pricing algorithms can "discriminate to the detriment of historically disadvantaged groups" ^[4]. If an algorithm learns that customers in certain ZIP codes (often lower-income, disproportionately Black and Latino neighborhoods) are less likely to comparison-shop, it can charge them more. No human ever made that decision. The algorithm did it automatically, optimizing for profit.

That's why Bonta's investigation also examines compliance with civil rights laws. Algorithmic pricing discrimination could violate California's Unruh Civil Rights Act, which prohibits arbitrary discrimination by businesses ^[1].

What You Can Do

Surveillance pricing depends on data. Cut the data, and the algorithm has less to work with:

Use a VPN. Your IP address and location are pricing inputs. Masking them forces the algorithm to guess.
Clear cookies or use private browsing. Pricing algorithms rely on tracking cookies to build your profile. Fresh sessions mean fresh prices.
Compare prices across devices. Check the same product on your phone, your laptop, and a friend's device. Different profiles often mean different prices.
Opt out of data collection. Under the CCPA, California residents can opt out of the sale and sharing of personal information. Exercise that right.
Ditch loyalty programs. Those reward cards aren't just tracking purchases. They're feeding the pricing engine. The 5% discount might cost you 23% on the other end.
Report it. If you're in New York, use the AG's complaint form to report algorithmic pricing without disclosure. If you're in California, file a consumer complaint.

The Bigger Picture

Surveillance pricing is where corporate data collection meets your wallet. Every article we write about data brokers, tracking pixels, and behavioral profiling. This is where it lands. Your data isn't just being collected for targeted ads. It's being used to calculate the maximum price you'll tolerate.

California's investigation is the first time a state attorney general has directly taken on the practice under existing privacy law. If Bonta finds violations, the enforcement actions could set the template for the other 19 states with comprehensive privacy laws.

250 businesses. Eight surveillance pricing vendors. Prices that shift based on who you are, where you live, and what you've clicked. The algorithm already knows your price. California is finally asking whether that's legal.

Sources

Published: February 6, 2026