Seattle ban on AI-driven grocery pricing sparks warnings of lost discounts from retailers - KOMO

Seattle ban on AI-driven grocery pricing sparks warnings of lost discounts from retailers

SEATTLE — City leaders in Seattle are taking aim at what they call a hidden threat to people’s grocery bills.

The Seattle City Council has approved a first-in-the-nation ban on what some refer to as surveillance pricing. The new law, passed on Tuesday, prohibits major grocers from using artificial intelligence and shoppers’ personal data to set individualized prices.

Grocers warn the new law could put customer discounts at risk.

The Fair and Transparent Pricing ordinance passed 7-2, with Councilmembers Robert Kettle and Maritza Rivera opposed. It now goes to Mayor Katie Wilson for her signature.

The measure prohibits large online and brick-and-mortar grocery retailers from using information such as race, gender, employment status, location, browsing history, social media activity or chatbot conversations to determine what an individual shopper pays.

Retailers must clearly post prices and make them available to all customers. The ordinance preserves traditional coupons and transparent discounts, including those offered to seniors, veterans or loyalty-program members.

Councilmember Alexis Mercedes Rinck, who developed the ordinance with Wilson, said the goal is to prevent companies and data brokers from quietly using personal information to manipulate the price of everyday necessities.

A 2025 Consumer Reports investigation found that algorithmic pricing at major retailers resulted in price differences of up to 23% for the same groceries.

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The ordinance applies to grocery chains with at least 20 locations worldwide and includes delivery services. Convenience stores, farmers' markets and smaller grocery chains are excluded.

The grocery industry has pushed back, arguing the law could unintentionally restrict personalized discounts and loyalty programs that customers use to lower their bills.

Safeway said it does not use personal information to charge customers higher prices. The company said it uses customer data for voluntary savings programs, including digital coupons, member prices and personalized deals.

A Safeway spokesperson said the company may no longer be able to offer its Safeway for U loyalty program under the ordinance, which the company said can save active members more than $30 a week on average.

Rivera said she supports banning retailers from using personal data to raise prices but voted against the legislation because she fears it could make groceries more expensive for families by discouraging stores from offering discounts.

The Washington Retail Association also said it supports a ban on data-driven price increases but argued the Seattle measure could expose retailers to legal risk and cause them to eliminate coupons and tailored promotions.