The Colorado House voted today to ban the use of personal data to algorithmically set the price of a product or determine a wage. The legislation will now advance to the Colorado Senate for consideration. The summary of the bill, HB26-1210, reads:
Surveillance data is defined in the bill as data that is obtained through observation, inference, or surveillance of consumers or workers and that is related to personal characteristics, behaviors, or biometrics of an individual or group. The bill prohibits discrimination against a consumer or worker through the use of automated decision systems used to engage in:
- Individualized price setting based on surveillance data regarding a consumer; or
- Individualized wage setting based on surveillance data regarding a worker.
Obviously, the bill enumerates exceptions to the above rules, as it is not intended to ban, for example, charging a customer more to deliver an item a longer distance nor to prohibit schemes like discounts for students or seniors. It is obviously a challenge to write these laws narrowly enough to prohibit dystopian hyper-individualized pricing based on tracking of Internet and phone activity but not normal business practices like pricing insurance policies according to demographic risk factors. This tension is one of the main valid criticisms of bills like these.
Colorado is one of at least a dozen American states considering similar bans. I don’t believe any of these proposed broad-based bans have been signed into law yet. I wrote about algorithmic price discrimination (surveillance pricing) last week in the context of proposed legislation in the Canadian province of Manitoba.