Nashville Bill Would Force Retailers to Disclose AI Pricing

Nashville Targets Personalized Pricing Practices

Nashville's Metro Council is considering legislation that would require retailers to tell customers when artificial intelligence or algorithms are being used to set individualized prices. The proposed ordinance, introduced by District 4 Council member Mike Cortese, aims to bring transparency to what he describes as a largely invisible pricing practice that uses personal data to determine how much different shoppers pay for the same item.

Under the proposal, any business operating in Davidson County—whether a local shop or national chain—would need to notify customers before purchase if algorithmic pricing is in use. That disclosure would appear during online checkout or near the register in physical stores.

How Algorithmic Pricing Works

The practice, which federal regulators call surveillance pricing, involves software that analyzes a customer's search history, past purchases, and other personal data to calculate what that individual might be willing to pay. If a retailer's system detects someone has repeatedly searched for cold medicine, for example, it may infer urgency and raise the price of cough syrup in that person's cart.

Cortese calls this calculated maximum the "reservation price"—the highest amount a company believes a customer will accept before abandoning the purchase.

The Federal Trade Commission has been investigating how companies deploy consumer data and AI for price personalization, distinguishing it from dynamic pricing, which adjusts costs based on broader market factors like supply and demand rather than individual profiles.

Why it matters

As AI-powered pricing tools become cheaper and more accessible, the line between competitive pricing and discriminatory practices grows harder to see. Local governments have limited tools to regulate technology-driven commerce, and Nashville's effort represents an early attempt to establish ground rules. If the ordinance passes, it could serve as a template for other cities grappling with algorithmic transparency—or expose the practical limits of municipal enforcement in a space dominated by national platforms and cloud-based systems.

Enforcement Challenges Remain

Cortese acknowledged that enforcement is the proposal's biggest hurdle. He is working with Metro's legal team to develop a workable compliance mechanism, noting that local governments lack infrastructure to monitor rapidly evolving AI applications.

The bill also covers dynamic pricing, where digital price tags enable real-time adjustments throughout the day based on market conditions. These systems are becoming more common in retail environments.

The Metro Council is scheduled to hold a public hearing on the measure Tuesday, though Cortese said it may be deferred if lawmakers have not resolved enforcement questions.

Consumer Protections

To limit exposure to personalized pricing, privacy experts recommend using private browsing modes, blocking third-party cookies, disabling activity tracking in apps and websites, and employing a VPN to mask location and IP address. For significant purchases like flights or electronics, comparing prices across different devices can reveal disparities.

These details were first reported by Fox 17 Nashville.