Consumers in the United States are increasingly concerned about how retailers use digital price tags, data and AI-assisted tools to set prices.
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U.S. consumers say they are not only frustrated by high prices, but also unsettled by the growing use of high-tech systems that businesses rely on to determine what customers pay, including digital shelf labels, data-driven personalization and AI-assisted pricing tools.
Katie Thomas, who leads an internal consumer behaviour think tank at management consulting firm Kearney, said there are “major tensions happening right now between who’s really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper.”
While some companies argue their pricing tools are being misunderstood, critics say businesses are not always transparent about what customer data they collect and how it is used, which has fuelled suspicion and speculation online.
One example involves claims on social media that electronic shelf labels in some U.S. stores will scan shoppers’ faces or cellphones to set individualized prices. Thomas said those claims were false, describing them as misconceptions about how the technology works.
Several federal and state efforts are also in motion. Legislators in at least 30 U.S. states considered pricing bills this year, including measures addressing algorithmic and personalized pricing, according to the National Conference of State Legislatures. The Federal Trade Commission has proposed an enforcement policy indicating that failing to disclose the use of personal data to set individualized prices could violate consumer protection law.
The concerns come as multiple pricing practices draw attention. Dynamic pricing, which adjusts prices based on changing market conditions such as supply and demand, is used in different industries; in air travel it can mean ticket prices change as departure approaches, and surge pricing in ridesharing increases fares when demand outstrips available drivers.
Dynamic pricing has also been documented across a range of retail categories. A web data company, Decodo, tracked price changes in 2025 across products including electronics, clothing and home improvement supplies, and said about half of the changes it recorded were decreases.
Digital price labels are also spreading in the United States. Stores use electronic displays to update shelf prices without replacing paper tags. Digital labels are already used in other regions and are drawing attention as they expand into major U.S. retailers including Walmart and Whole Foods.
Consumer advocates have argued digital labels could eventually be used for surge pricing or personalized pricing, while labour unions have opposed the technology. Retail technology company Relex Solutions said electronic shelf labels typically update prices on a regular schedule, often weekly, and that shoppers value consistency. Relex also said researchers who tracked prices at an unnamed grocery chain found “virtually no surge pricing” after the labels were introduced, noting that changing prices throughout the day in grocery and general merchandise is “exceedingly rare.”
Another practice drawing scrutiny is personalized pricing, sometimes described by regulators and advocacy groups as “surveillance pricing.” Personalized pricing means offering different prices or discounts based on information such as location, income and web-browsing habits. It remains unclear how widely personal data is used to customize prices.
An FTC staff report released in January 2025 found that intermediaries offering tools that tailor prices and promotions worked with at least 250 clients, including grocery and clothing retailers. Some states have passed restrictions, including Maryland and New Jersey, where laws focus on groceries with exceptions for certain loyalty discounts and other promotional offers, and Connecticut, which covers a broader range of retail purchases.
The issue has also appeared in legal disputes. In 2022, California prosecutors sued Target alleging its app displayed lower prices before shoppers entered stores and raised them once they were inside. Target agreed to a $5 million settlement and a ban on using so-called geofencing technology to increase prices. In response, Target said the app functionality at issue was used to “provide guests with accurate pricing, which can vary across stores and channels,” and that it did not personalize prices based on a guest’s data or behaviour, adding it was “committed to clear, transparent pricing.”
Even when different prices are observed, it does not necessarily show that personal data is being used. Last year, an investigation by Consumer Reports, Groundwork Collaborative and More Perfect Union found that shoppers on Instacart were shown different prices for identical products at the same stores. Instacart ended what it described as tests that randomly assigned shoppers to groups rather than setting prices based on personal information.
AI is also being used to support pricing decisions. Algorithmic pricing uses software to recommend or automatically set prices, and AI can help identify patterns in sales, competitors’ prices and other information to predict demand and estimate how different prices may affect sales and profits.
A survey by Simon-Kucher reported that 41% of more than 2,200 business leaders in 28 countries and 39 industries said they used AI software to gather market intelligence, including competitors’ prices, and 28% said they used it for “real-time price optimization,” choosing prices to advance business goals such as increasing profits, attracting shoppers or clearing unsold goods.
The National Retail Federation said algorithmic pricing is a new method of doing what retailers have always done—monitoring and adjusting prices depending on supply, demand, seasonality and competitors’ prices. The FTC has also challenged certain algorithmic practices, including a lawsuit against Amazon that alleged a pricing tool, codenamed Project Nessie, was used to identify products whose prices could be raised with competitors likely to follow. The agency alleged that the tool generated more than $1 billion in excess profits, and a trial is scheduled for next year. Amazon said the FTC allegations “grossly mischaracterize” the pricing tool, and said it tested it for a few years but it was scrapped before the lawsuit.
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