American consumers are not only frustrated by high prices. They are angry and confused about the increasingly high-tech methods restaurant chains and big retailers use to set their prices.
Digital price labels are quickly replacing paper ones in grocery store aisles. Artificial intelligence The tools help businesses decide how much to charge by predicting customer response. Terms like “dynamic pricing” and “watch prices” spark anxiety on social media, where users wonder if different people are getting different prices for the same product.
Americans have become accustomed to changing prices when booking flights, hotel rooms and rides, but the prospect of daily spending shaped by algorithms they don’t understand and personal data they may not realize they share has struck a chord.
“There are major tensions right now between who will actually have the power with some of these algorithms and the use of bots and AI: the companies or the buyers,” said Katie Thomas, who runs an in-house consumer behavior think tank at management consultancy Kearney.
Companies using technology say some concerns stem from misconceptions about how their pricing tools work. Walmart CEO John Furner said in a blog post last month that digital price tags save workers time and keep prices up to date. He said the labels are not used to increase prices based on weather, time of day or the individual buyer.
“We price the product, not the person,” Furner wrote.
But companies are not always transparent about what customer data they collect and how it is used, which has made consumers wary and led to speculation. For example, social media posts falsely imply that electronic tags Walmart plans to install in all of its U.S. stores scan shoppers’ faces or cell phones to set individualized prices, Thomas said.
Lawmakers and regulators are taking action. Lawmakers in at least 30 states have 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 warning businesses that not disclose their use collecting personal data to set individualized prices could violate consumer protection law.
Here are some of the pricing practices and technologies that are under scrutiny.
Dynamic pricing can increase and decrease prices
What is this : Dynamic pricing means adjusting prices in response to changing market conditions, including supply and demand. An airline that adjusts ticket prices closer to departures uses dynamic pricing. Uber’s practice of increasing fares when demand exceeds the supply of available drivers, such as during peak hours, is a type of dynamic pricing known as peak pricing.
Why it matters: Frequent price changes extend far beyond food. Decodo, a web data company, tracked price changes in 2025 for products ranging from electronics to clothing and home improvement products. About half of the changes recorded in the United States were decreases, contrary to consumer assumptions that dynamic pricing only increases prices, said Gabriele Vitke, senior product marketing manager.
Digital Price Tags Coming to More U.S. Stores
What they are: Digital displays that allow stores to electronically update on-shelf prices instead of replacing paper labels.
Why it matters: Digital price tags, long used in Europe and Asia, are gaining more attention as they spread to major U.S. retailers like Walmart and Whole Foods. Consumer advocates have argued that digital labels could eventually be used for price gouging or personalized pricing. Unions have also opposed this technology.
Electronic labels facilitate frequent changes but do not necessarily lead to higher prices during times of high demand. Retailers typically update electronic shelf prices on a regular schedule, often weekly, because shoppers appreciate consistency, said Asa Farquhar of Relex Solutions, a retail technology company. The researchers who followed prices at an unnamed grocery chain revealed “virtually no price increases” after the labels were introduced.
“Changing prices throughout the day, as airlines or ride-hailing apps do, is extremely rare in grocery and general merchandise today,” Farquhar said.
Personalized pricing, also called monitoring pricing, leverages customer data
What it is: Personalized pricing means offering customers different prices and discounts based on their location, income, web browsing habits, and other information about individuals or groups of buyers. Some advocacy groups and regulators use the term “monitoring pricing” to refer to the same practice.
Why it matters: It’s unclear to what extent companies use personal information to personalize prices. An FTC report released in January 2025 found that intermediaries offering tools to adjust prices and promotions worked with at least 250 clients, including grocery and clothing retailers.
Lawmakers in Maryland, New Jersey and Connecticut recently passed restrictions on using buyers’ personal data to determine what they pay. Maryland and New Jersey laws focus on groceries, with exceptions for certain loyalty discounts and other promotional offers. Connecticut law covers a broader range of retail purchases.
California prosecutors sue Target in 2022, alleging that the retailer’s app showed lower prices before shoppers entered stores and increased them once inside.
Target agreed to a $5 million settlement and a ban on using so-called geofencing technology to raise prices.
Target said the app functionality in question was used to “provide customers with accurate pricing, which may vary by store and channel.” The retailer said it does not personalize prices based on a customer’s data or behavior and remains “committed to providing clear and transparent pricing.”
Different prices do not necessarily mean that personal data has been used. Last year, an investigation by Consumer Reports, Groundwork Collaborative and More Perfect Union found that shoppers on Instacart were being shown different prices for identical products in the same stores. Instacart then ended what it described as tests that randomly assigned shoppers to groups rather than setting prices based on their personal information.
Algorithmic pricing gets help from AI
What it is: Algorithmic pricing uses software to automatically recommend or set prices. Companies have been using such systems for decades. AI can help software identify sales patterns, competitor prices and other information to predict demand and estimate the impact of different prices on sales and profits. These tools can support both dynamic and personalized pricing.
Why it matters: It’s unclear to what extent retailers are using AI to set prices, but research suggests companies across all industries are adopting it.
Simon-Kucher, a global consulting firm, surveyed more than 2,200 business leaders across 28 countries and 39 industries last year, and 41% said they were using AI software to gather market intelligence, including competitor pricing. Another 28% said they use it for “real-time pricing optimization.” Pricing optimization means choosing prices that advance business goals, such as increasing profits, attracting buyers, or eliminating unsold inventory.
The National Retail Federation, which represents stores large and small, said algorithmic pricing is a new method of doing what retailers have always done: monitor and adjust prices based on supply, demand, seasonality, competitor prices and other factors.
Some lawsuits allege that companies used pricing algorithms to harm competition.
An antimonopoly lawsuit filed by the FTC against Amazon in 2023 challenged, among other practices, an algorithmic tool codename Project Nessie. The agency says Amazon used the tool to identify products it could raise prices for from competitors that might follow, generating more than $1 billion in excess profits.
A trial is scheduled for next year. Amazon said the FTC’s allegations “grossly misrepresent” the pricing tool.
Project Nessie aimed to prevent retail price-matching practices from creating unsustainable prices, the e-commerce giant said. Amazon said it tested the tool for a few years, but it didn’t work as expected and was abandoned before the federal agency’s lawsuit.
A recent consumer trial v. McDonald’s alleged that its pricing system used non-public sales data from competing locations to coordinate prices. The Chicago-based burger giant said the lawsuit was “riddled with inaccuracies” and that the company was making the tool available to U.S. franchisees to help them set prices at their individual restaurants.
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