(The Center Square) – The increasing presence of digitized labels in major retailers has the potential to allow AI-driven pricing algorithms capitalize on shoppers’ habits in ways that most don’t realize.
The potential misuse of the technology, however, has lawmakers split on whether it should be prohibited in Pennsylvania.
A proposal which would ban the use of dynamic pricing and digitized labels, when used in conjunction, passed with bipartisan support 18-8 in the House Consumer Protection, Technology and Utilities Committee Tuesday. It now moves to the full chamber for consideration.
“Constituents deserve to shop for household goods without being outsmarted by a hidden algorithms when they reach the checkout,” the bill’s sponsor, Democratic Rep. Nate Davidson, said. “Pricing should be transparent, predictable, and fair.”
Dynamic pricing online is already prevalent, with familiar grocery retailers like Target, Kroger and Walmart using artificial intelligence to price items on their website using factors like the time of day, weather, or demand.
However, Walmart’s decision to put digital labels in all its stores by the end of 2026 has many legislators worried that dynamic pricing will not be limited to online shopping for long.
“Consumers are already under a lot of pressure right now,” Davidson said.
Latest reports from the U.S. Consumer Price Index reveal food prices have increased by 3.1% across the nation, with fresh produce like fruits and vegetables having the highest inflation levels at 6.1%. For grocery shoppers who are trying to stretch their paychecks while providing quality nutrition for their families, digitized and AI-driven pricing strategies could make shopping for essential goods increasingly more complicated and stressful.
Proponents of this bill, and similar ones, commonly use the example that without a ban dynamic pricing via digital labels could raise prices between the shopping aisle and the check out register. Others argue that this technology could be beneficial for both consumers and business owners.
“The scenario that a retailer brought up to me was that they use artificial intelligence to monitor the time that a product is on the shelves,” said top Republican member of the committee, Rep. Carl Metzgar from Somerset County.
Metzgar said that instead exploiting consumers and wringing every possible cent from them, the use of AI and digitized labels has made a “positive impact” by triggering automatic sales. By instantaneously changing the price of perishable goods, retailers reduce waste while providing shoppers with better value.
Democratic Committee Chairman Rep. Danilo Burgos disagreed, pointing out how the same mechanisms used to lower prices could just as easily raise them.
“I believe this bill will help keep in check corporate America and protect Pennsylvania consumers,” he said.
Davidson also maintained that the risks, especially for Pennsylvania’s most underprivileged, outweighed the possible benefits.
“I want out business community to have access to new technologies, to help them better their bottom line and make them a more efficient business. However, I want to make sure that we’re also thinking about those most vulnerable Pennsylvanians,” Davidson said, citing how this version of dynamic pricing unequally affects those who are on fixed incomes, have limited transportation options, or no access to online shopping.
“Those Pennsylvanians are at risk, seeing their prices increase without any knowledge of their own while they are shopping.” Davidson said.
