New State AI Laws Could Ban Your Pricing Software

Seven states just introduced bills targeting AI pricing tools

If your business uses software that adjusts prices based on customer data, demand patterns, or competitor analysis, pay attention. Legislators in Michigan, Minnesota, Iowa, New Jersey, California, Hawaii, and Nebraska have introduced bills in early 2026 that would regulate or outright ban certain forms of AI-driven pricing.

The bills target what lawmakers call surveillance pricing — the practice of using personal data and algorithms to charge different customers different prices for the same product or service. And while the legislation is primarily aimed at big tech and large retailers, the language in several of these bills is broad enough to catch small businesses using off-the-shelf dynamic pricing tools.

What happened

The wave of legislation follows the FTC’s 2024 investigation into surveillance pricing, which examined how companies use personal data to set individualized prices. With new FTC leadership signaling that continuing the study isn’t a priority, state lawmakers have stepped in to fill the gap.

Here’s what’s on the table:

Michigan SB 794: Targets AI-driven rental price setting. Introduced by six Democratic lawmakers, it would regulate how algorithms set prices in the housing and rental market.
Minnesota HF 3408: Explicitly titled to “prohibit surveillance-based price setting.” Introduced by three Democrats.
Iowa HF 2469: Adds surveillance pricing restrictions to existing consumer protection law.
New Jersey S 3612 / A 4085: Companion bills that would prevent businesses from using personal consumer data to set prices for merchandise or services.
California AB 2564: Broad surveillance pricing bill under consideration.
Hawaii HB 2458: Focuses specifically on AI-driven pricing of food products. Already passed one committee.
Nebraska LB 771: Targets dynamic pricing in transportation networks. Has advanced to enrollment.

These join a growing list. According to MultiState’s tracking, over 100 price transparency bills were introduced across 33 states in 2025 alone, and 2026 is accelerating the trend.

Why this matters for small businesses

Here’s the concern: most of these bills weren’t written with your local retail shop or restaurant in mind. They’re aimed at companies like Amazon, Uber, and large property management firms that use sophisticated algorithms to personalize prices at scale. But the legal language doesn’t always make that distinction.

The tools you already use might be covered

If you use a Shopify plugin that adjusts prices during peak demand, a restaurant POS system with dynamic menu pricing, or an e-commerce tool that offers different prices based on location — these could fall under the umbrella of “surveillance pricing” depending on how each state defines it.

New Jersey’s bill, for example, targets any business that uses “personal data to set prices for merchandise or services.” That’s a broad net. A loyalty program that offers discounts based on purchase history could theoretically qualify.

Compliance costs hit small businesses harder

Large retailers have legal teams to parse new regulations. A three-person shop in Morgantown or a family restaurant in Pikeville doesn’t. When compliance requirements land, small businesses spend disproportionately more per employee on regulatory costs than their larger competitors.

New York is already enforcing

New York put a law into effect that requires businesses to disclose when prices are derived from algorithms that use personal data. If you sell to customers in New York — even online — you may already need to comply.

Our take

The intent behind these bills is reasonable. Nobody wants to be charged more for a plane ticket because an algorithm knows they search for flights from a work laptop. Price discrimination based on personal data is a real concern, and consumers deserve transparency.

But the execution needs work.

The bottom line: Most small businesses using AI pricing tools are trying to compete, not exploit customers. Legislators need to distinguish between personalized price gouging and standard business tools that help small operators stay competitive.

What’s missing from the conversation:

Small business exemptions. Few of these bills include carve-outs for businesses under a certain size or revenue threshold. The SBA reports that small businesses make up 99.9% of all U.S. businesses — they should be part of the drafting process.
Definition clarity. Is a happy hour price that varies by day “dynamic pricing”? Is a loyalty discount “surveillance pricing”? The bills need sharper definitions.
The competition angle. Dynamic pricing tools are one of the few ways small businesses can compete with larger companies that already optimize prices at scale. Restricting access to these tools could widen the gap, not close it.

What you should do

Check your tools now

Audit your pricing software. List every tool that touches pricing — POS systems, e-commerce plugins, booking software, loyalty platforms. Note which ones use customer data or algorithms to adjust prices.
Read the fine print. Check whether your pricing tools use personal data (browsing history, location, purchase history) versus aggregate data (demand curves, competitor prices). The distinction matters in most of these bills.
Document your pricing logic. If you can explain why a price changes — seasonal demand, inventory levels, time of day — you’re in a better position than if your software is a black box.

Watch for these signals

Your state’s legislative session. Bills in Michigan, Minnesota, and New Jersey are early-stage. Track them through your state legislature’s website or sign up for alerts from your local chamber of commerce.
Industry group responses. The National Retail Federation, National Restaurant Association, and other trade groups are likely to weigh in. Their advocacy could shape exemptions.
Federal preemption. A DOJ case set for trial in October 2026 could define how U.S. law treats algorithmic pricing. A federal ruling might supersede some state-level bills.

Stay ahead of the curve

AI pricing tools aren’t going away — and neither is regulation. The businesses that come out ahead will be the ones that use AI pricing transparently, document their logic, and stay informed as laws evolve.

If you’re using AI tools to run your business and want to make sure you’re on solid ground, talk to our consulting team. We help small businesses across Appalachia adopt AI responsibly — including making sense of the regulatory landscape.

For more context on how AI regulation is shaping small business tools, read our coverage of the Small Business AI Training Act and our breakdown of how to evaluate AI tools before committing to a platform.