Colorado Moves to Ban Surveillance Pricing and Algorithmic Wage Setting

The Colorado House of Representatives has taken a significant step toward consumer protection by passing legislation that would ban companies from using personal data and algorithms to set individualized prices and wages. House Bill 26-1210, which passed on a 39-24 vote, targets what critics call "surveillance pricing" - the practice of using detailed consumer data to charge different prices to different people for the same products.

The Scope of Surveillance Pricing The bill addresses a growing concern about how companies collect and use personal information. As Rep. Javier Mabrey, the Denver Democrat sponsoring the legislation, explained during floor debate, companies are increasingly using data from our phones and online activities to determine what we pay. This includes search history, financial information, online habits, and how we interact with websites and apps.

"Everybody understands that our phones have become extensions of our brains," Mabrey said. "We put our most intimate thoughts into our phones - our texts, our searches, our geolocation data - and the biggest companies in the world are collecting that data and selling it to other companies, who are using it to decide how much to charge us as individuals for things like plane tickets, groceries, medicine for when your kids are sick."

The legislation would prohibit sending someone's personal data through algorithms to determine either their wage or the price of a product. This practice has become increasingly sophisticated as artificial intelligence advances, allowing companies to adjust prices based on detailed individual consumer characteristics.

What the Bill Doesn't Cover Importantly, the legislation includes specific carve-outs. Loyalty programs, coupons, and discounts for specific groups like veterans and teachers would still be permitted. The bill also explicitly states that price fluctuations based on supply and demand would not be considered surveillance pricing.

This distinction is crucial because it allows businesses to continue using traditional pricing strategies while targeting the more controversial practice of personalized pricing based on individual consumer data.

The Technology Behind the Problem The Federal Trade Commission released a report in 2025 that found prices are becoming increasingly multi-dimensional, varying based on personal data and audience segmentation. As AI technology improves, companies can glean more detailed information about individual consumers and adjust pricing accordingly.

This represents a fundamental shift in how markets operate. Rather than setting prices based on broad market conditions or product costs, companies can now use sophisticated algorithms to determine the maximum amount each individual consumer might be willing to pay.

National Context and Precedent Colorado isn't alone in addressing this issue. Multiple states are considering similar bills this year, with most focusing on consumer disclosure requirements. New York became the first state to require disclosure of algorithmic price setting using personal data when it passed legislation in November 2025.

However, Colorado's approach goes further by actually banning the practice rather than just requiring disclosure. This makes it one of the most aggressive attempts to regulate surveillance pricing at the state level.

Enforcement and Legal Framework The bill would classify surveillance pricing as a deceptive trade practice, making it enforceable by the state attorney general. This gives the state significant power to investigate and prosecute companies that violate the law.

Rep. Jennifer Bacon, another Denver Democrat sponsoring the bill, framed it as a modern extension of existing consumer protection laws. "There is a reason why we have antitrust laws," she said. "There is a reason why we have anti-deceptive practices laws, and it's to protect the consumer's ability to actually engage. This is the 21st century version of it."

Opposition and Concerns Not everyone supports the legislation. Republican Rep. Chris Richardson of Elbert County argued that the bill is too broad and could inadvertently regulate standard business practices. He expressed concern that it might affect legitimate uses of data analytics in the workplace, such as human resources software that recommends pay bands based on employee performance.

"I absolutely agree that consumers and wage earners should not be exploited by the use of their data," Richardson said. "But it's still overly broad and it's still overly vague in very important parts. And I believe it's overly simplistic in its definition of wage setting."

These concerns highlight the challenge of crafting legislation that targets specific problematic practices without creating unintended consequences for legitimate business operations.

Next Steps The bill now moves to the Colorado Senate for consideration. If passed by the Senate and signed by the governor, it would represent one of the most comprehensive attempts by a state to regulate how companies use personal data for pricing and wage decisions.

The legislation reflects growing awareness of how technology is changing the relationship between businesses and consumers. As more of our lives move online and companies collect increasingly detailed data about our behaviors and preferences, questions about fairness, privacy, and market manipulation become more pressing.

Whether other states will follow Colorado's lead remains to be seen, but the passage of this bill suggests that at least some lawmakers believe current consumer protection laws haven't kept pace with technological change. The debate over surveillance pricing is likely to continue as more states grapple with how to balance innovation, business interests, and consumer rights in the digital age.