California lawmakers want to stop artificial intelligence from pulling you apart.
In recent weeks, lawmakers have introduced five bills to address the issue, making predicted pricing based on customer personal information one of Congress’s most popular tech policy concerns in this session.
With Amazon, Ride-Hailing Apps, Travel Companies, and retail giants like Staples and Target in practice, you can set different prices for customers based on factors like internet browsing data and where you live. In a recent example published by SFGATE, Bay Area people were offered $500 more hotel rooms than people from less wealthy areas.
Pricing is not based on demand or demand. It’s based on predictions made about your enthusiasm and desires, said researcher Justin Clotzco. In a recent example, he discovered that Lyft accused his wife of five more dollars than him for the same ride. Kloczko works for Consumer Watchdog. This is an advocacy group that sympathizes with one of the bills.
“They are literally trying to hack your brain. They are trying to read your mind and what you want,” he said. “I think this is always happening. It’s really hard to catch.”
The package of bills proposed by California lawmakers to regulate AI responds to the call from speaker Robert Ribas after the election last fall, focusing on measures to address the cost of living.
One bill, introduced by Congressman Cecilia Aguial Curry, a Democrat who represents Davis, makes it easier for the California Attorney General to pursue lawsuits against businesses that use pricing algorithms trained with privately-publicly competitor data. Another bill would prohibit the use of algorithms that personalize prices based on perceived characteristics or personal data.
Another, Senate Bill 52 prohibits the use of algorithms that price rental properties and allows tenants to sue their landlord if they discover the use of technology. The proposal follows the filing of an antitrust lawsuit by eight states against Realpage, a Texas company that uses software to set rental prices. A 2020 survey by Markup and The New York Times found Realpage used failed algorithms to automate background checks for tenants, falsely condemning crimes and denying where to live.
State Sen. Melissa Haltado, a Democrat who represents Bakersfield, has also reintroduced the bill to prevent algorithmic pricing. The Senate Judiciary Committee criticized previous versions of last year’s bill. This is because the Attorney General already has the power to file lawsuits that violate the state’s antitrust laws.
And finally, Congressional Bill 446 makes it illegal for retailers to use personal information or make predictions about them based on their appearance, in order to change the price of items sold at retailers. In the bill rollout, author Rep. Chris Ward cited a $5 million settlement with Target following a lawsuit by San Diego County where customers saw a higher price on the Target app if they were in the parking lot. San Diego Democrats fear being perceived in parallel with their e-shelves at grocery stores could lead to a future in which prices are engraved on the spot based on a person’s appearance and physical characteristics. In a letter to Kroger, the largest supermarket chain in the United States, Congress members also expressed concern about the possibility of technology-enabled price gouging based on time and weather.
Tweaking prices and targeting them could lead to revenue growth of 2% to 5%, according to the first Federal Trade Commission report released just days before the Biden administration ended. For example, a company can target first-time parents or car buyers with higher priced items, or infer about people based on their location or IP address.
According to a recent analysis by the National Congressional Congress, consumer protection is the main goal for state legislators interested in regulating AI. State lawmakers are stepping up as Congress fails to act and policies vary widely from presidential administrations to another. The state’s technology policy report published in December by the NYU’s Center for Social Media and Politics found a 163% increase in technology policy proposals by state lawmakers compared to last year in 2023.
Other laws aimed at protecting customers require that when AI is used to change the images displayed on Trulia on real estate websites, one bill requires disclosure, while another must disclose the number of claims it rejects using AI each month. A class action lawsuit filed in 2023 alleges that UnitedHealthcare and Cigna used AI to deny people’s healthcare services. UnitedHealthCare and Cigna deny these allegations. A recent analysis by the National Assembly of State Legislatures found that lawmakers from around 12 states have proposed legislation regulating the use of AI in healthcare.
Between deficit pressures, wanting to keep California businesses up, the governor’s future political ambitions, and debates over whether regulations will curb innovation, lawmakers need to predict whether Gavin Newsom could reject the AI bill.
Looking at the slates of 30 AI bills proposed by California lawmakers, there is a clear focus on kitchen table issues, such as how AI gouges grocery stores prices and how to raise prices. He currently works for Tech Equity, a nonprofit organization that is one of the supporters of the bills that prevents algorithms from setting pricing.
“I’m very excited about the bills I’ve seen so far, but the big question is where the governor goes for these bills, where the federal government will take action and potentially ahead of the policy field,” he said.
Calmatters.org is a non-profit, nonpartisan media venture that explains California policy and politics.
