Colorado’s governor vetoed a bill on Tuesday that would have banned companies from using surveillance pricing to set workers’ wages and prices for consumer goods.

The measure would have been the strongest in the nation against algorithmic pricing. While Maryland became the first state to approve a law banning surveillance pricing in grocery stores in April, Colorado’s proposed measure was more expansive.

Governor Jared Polis wrote in a public letter explaining his veto that he found the legislation to be overly broad, and said it would “inadvertently capture innocuous uses of technology that in no way harms – and indeed benefits – consumers and workers”, echoing business owners’ major concern with the bill, which was supported by progressive groups. He said the bill would “punish differentially lower prices, not just higher prices”.

Consumer advocates are unhappy with the veto. “Governor Polis had an opportunity to stand with working Coloradans, but instead chose to side with the dominant corporations using invasive surveillance data to pick their pockets,” said Pat Garofalo, director of state and local policy at the American Economic Liberties Project.

Colorado’s bill proposed banning companies from using algorithms, powered by artificial intelligence or other data-processing techniques, to set custom prices or wages based on the collection of an individual’s information. This data could include everything from where an individual lives and what they have bought in the past, to their financial status, travel habits and affiliations.

Critics of surveillance pricing say that companies exploit this data to charge buyers the most that they are willing to pay, and give workers the lowest amount they are willing to accept. Colorado’s measure also included exemptions for certain discounts tied to loyalty programs and transparent markdowns for students and senior citizens.

This is the second time in 12 months that Polis has blocked a bill focused on surveillance pricing; in 2025, he vetoed a measure that would have banned landlords from using rent-setting algorithms.

Surveillance pricing bans grow in popularity across US

Many states, including Illinois, California, Massachusetts and New Jersey, are also considering bills that would regulate surveillance pricing. Connecticut’s legislature approved a sweeping consumer privacy bill that included new rules for surveillance pricing in May. The measure bans companies setting individualized prices for their goods based on consumer data.

In New York, the state attorney general is rallying support for a ban on surveillance pricing, and a bill that would do so has passed the state senate, but not the assembly; last year, New York enacted a transparency-focused law that forces companies to disclose when they use personal data to set individualized prices determined by an algorithm.

Maryland became the first state to ban surveillance pricing in April, though that measure was limited to prices for grocery store items and was criticized by many consumer advocates for being riddled with industry carveouts.

Colorado’s surveillance pricing bill was larger in scope, as it applied to all sorts of companies across industries, and covered wages, too. It would have prevented ride-share firms such as Uber and Lyft from setting individualized wages for drivers based on data they collect about them, as documented in a 2023 study.

Colorado’s measure had also won over many critics of Maryland’s law, who feared that latter’s legislation was watered down by lobbying efforts.

Maryland’s measure, unlike Colorado’s proposal, did not crack down on other ways companies may try to achieve the same effect as surveillance pricing, says McBrien, with the Electronic Privacy Information Center (Epic). Under Maryland’s law, a company could raise its prices for everyone, and then offer individualized discounts – but Colorado’s law addressed this loophole, McBrien says.

Critics of Colorado’s bill agreed with the governor in characterizing the rules as overly broad; they argued it would disrupt competitive markets and open the door to unnecessary litigation. The Travel Technology Association, which represents online travel agencies and short-term rental platforms, called for a narrower definition of “surveillance data” and testified through written comment that the measure would “prohibit pricing practices that are transparent, pro-competitive, and beneficial to consumers – while exposing travel platforms to litigation exposure that bears no relationship to the harms the bill identifies”.

The Federal Trade Commission (FTC) has documented examples of surveillance pricing in stores selling clothing, beauty products, home goods and hardware. Under the Biden administration, the FTC released an initial study that indicates companies use a wide range of personal data when setting individualized prices for consumers.

But it’s unlikely the current administration will crack down on surveillance pricing, given that the current FTC chair, Andrew Ferguson, characterized the previous administration’s report as a rush job. Consumer advocates say the federal government’s inaction adds to the urgency of states needing to regulate surveillance pricing.

On 18 May, a bipartisan group of 16 state attorneys general wrote to the FTC about online food delivery fees, asking the agency to “address unfair and deceptive pricing practices across the economy”, including surveillance pricing.