In January, the Federal Trade Commission released a report that stated that a person’s browser history or precise location can be used to give them different prices for the same goods and services.
“Initial staff findings show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person’s location and demographics, down to their mouse movements on a webpage,” former FTC Chair Lina Khan said in a press release.
Colorado lawmakers took notice. Democratic Reps. Lorena Garcia and Javier Mabrey, along with Sens. Iman Jodeh and Mike Weissman, brought forth an ultimately unsuccessful bill in an attempt to limit the practice of using personal data to set both prices and wages.
“Our personal information, our personal data, our behaviors, our facial expressions, how we walk, our fingerprints, how we type, all these things are being captured right now by corporations,” Garcia said at the bill’s first committee hearing. “And they’re using this, or they have the strong potential to use this, to direct individualized pricing based on what they determine is what we could pay based on where we live, based on what our scrolling habits are.”
She said that an example of that data usage is ride-share programs that use data to determine how much to pay a driver and charge a rider. “In essence, our information is being taken from us and being used against us,” Garcia said. She also noted that it was an area that had a direct impact on small businesses, as larger corporations had more access to the technology.
Garcia explained that the bill would have prohibited those practices.
“Real experiments with workers show that the notion for equal pay for equal work is nonexistent in the gig economy, where wages are set on an individualized basis using hidden and private algorithms that collect private and sensitive data,” Mabrey said at the initial hearing.
“Surveillance prices and wages are an extraordinary privacy concern,” Mabrey added.
The bill ran into significant opposition, including from the executive branch. Michael McReynolds, the legislative liaison for the Governor’s Office of Information Technology, said that while the intent of the bill was appreciated, its approach was misguided and created unnecessary complications.
“We have concerns that the bill’s provisions regarding wage discrimination are largely duplicative of existing protections already in place,” McReynolds testified.
Business groups from across the state also testified in their opposition of the measure, including Meghan Dollar, the Colorado Chamber of Commerce’s senior vice president of governmental affairs and political operations.
“HB25-1264 while well intentioned in its purpose to continue to limit discriminatory behavior by an employer via AI will have the effect of prohibiting and disincentivizing the use of modern technological systems to make the workplace more efficient when evaluating an employee’s productivity and their positive work that often lead to growth in a company,” Dollar said.
“[We] are still very concerned about unintended consequences when this technology is still very new and we are currently working on cleaning up artificial intelligence legislation that was passed just last year,” Dollar said.
Rachel Beck, the executive director of the Colorado Competitive Council, said that they were concerned that the bill had too broadly defined key terminology and may lead to unintended consequences.
“While the harms that the bill seeks to prevent are largely hypothetical, the risks for Colorado businesses are real,” Beck said. “Most concerning, the bill retains an expansive private right of action with sweeping definitions of surveillance data and automated decision making. This creates an open-ended litigation threat, encouraging lawsuits over common, harmless and in many cases pro-consumer practices.”
Support for the bill came from an array of consumer rights, privacy rights and employee rights groups, including the American Civil Liberties Union of Colorado, Towards Justice and the Colorado Center on Law and Policy.
“Along with purchase history and social media interactions, retailers can use geolocation, age, race, ethnicity, finances, religion, employment and political speech to influence individuals’ financial decisions and engage in price discrimination,” Mika Alexander, a policy fellow at ACLU Colorado, said in the first committee hearing. “Consequently, these practices could lead to a chilling of our civil liberties like free speech and free expression.”
Nina DiSalvo, an attorney and policy director at Towards Justice, said that large corporations could use data to determine what consumers were willing to pay for a product or what a worker was willing to accept for a service.
“If a DoorDash dasher takes out a payday loan to make rent, might DoorDash offer him less for his next delivery, knowing that he’s desperate for work?” DiSalvo said. “The answer is yes.”
“The [FTC] indicated that surveillance pricing tools are actively being developed and marketed across a range of industries, including grocery stores, retail stores, credit card companies and other financial service providers,” DiSalvo said. “Meanwhile, academic analysis of the gig economy, particularly by [University of California, Irvine] law professor Veena Dubal shows different wages for different workers engaged in identical tasks for reasons obfuscated by black box wage setting algorithms.”
The bill ultimately ran aground in its second, action-only hearing, when sponsors asked the committee to postpone the measure indefinitely.