May 17, 2026, 2:06 pm | Read time: 6 minutes
If an online store can “guess” how much money you are likely willing to spend on a product or service, it can directly affect the displayed price. This is known as surveillance pricing, best translated as monitoring-based pricing. TECHBOOK explains what’s behind it.
Dynamic and Surveillance Pricing: Related but Not the Same
You’ve probably heard of dynamic pricing. This principle of dynamic pricing involves continuously adjusting sales prices to the current market situation. For example, if many users are searching online for a new smartphone or a specific train connection, prices can quickly rise. Conversely, if demand is low, goods or services are often offered at lower prices to make them more attractive.
The newer surveillance pricing takes it a step further. Here, the price doesn’t change based on supply and demand–the pricing is specifically tailored to the user’s individual data. As the U.S. Federal Trade Commission (FTC) explains, this model uses personal information to price consumers differently. The European Union is also aware of the issue and recognizes it as a real problem. More on this later.
How Does Surveillance Pricing Work?
According to the FTC, companies use a variety of behavioral and contextual data in so-called surveillance pricing approaches to estimate users’ willingness to pay and vary prices or discounts accordingly.
Device information plays a role, for example. Differences between high-end and budget smartphones can be interpreted as indirect signals of purchasing power or price willingness. In practice, it is recommended to use neutral or older devices for bookings or purchases.
Focus on Context and Environmental Data
Location data is also relevant, showing the environment a user is in, such as how high the rents are in their residential area. If someone is browsing at the airport, the systems running in the background associate this with a higher willingness to travel, which is then linked to a higher ability to pay.
Online Behavior and Digital Footprints
Extensive data from online behavior is also included, such as product searches, repeated visits to certain offers, abandoned shopping carts, and individual purchase history. “The (online providers, ed. note) might think: ‘He has money to collect antiques, he can pay extra,'” writes a user in simplified language in a Reddit discussion on the topic.
Data on online purchasing behavior is considered particularly valuable to companies because it can provide clues about specific purchasing interests and a user’s potential willingness to pay. Algorithms create profiles from many individual signals to help assess purchasing intentions and price sensitivity.
Potential Dangers of Surveillance Pricing
For consumers, there is a risk that algorithms will classify users as particularly willing to pay, causing them to pay more than necessary–for example, under time pressure, high demand, or when there are few alternatives for a product. Price comparison is made difficult because users often cannot tell if identical products are shown to others at different prices.
Additionally, customer trust can suffer if prices are not transparently determined and it remains unclear whether others receive the same offer at a lower price. People with few alternatives, such as in regions with little competition or urgent purchasing needs, are particularly at risk of being disadvantaged. Lastly, the practice is problematic for competition: Individual and non-transparent prices make direct comparison between providers difficult and can reduce price pressure.
Is the Principle Allowed in Germany? A Lawyer Weighs In
In principle, surveillance pricing is not categorically banned in the EU. However, clear legal boundaries apply. As soon as companies use personal data for personalized prices, consumer rights and data protection regulations of the European Union come into play. These include transparency obligations to customers and requirements for processing personal data. How far companies can go is explained by media law attorney Professor Christian Solmecke in a conversation with TECHBOOK.
Price Freedom–But Not Without Limits
In Germany, the principle of contract and price autonomy initially applies. “Retailers can freely calculate their prices and offer different deals to different customers as long as they do not violate the General Equal Treatment Act,” explains Prof. Solmecke. Different prices are not automatically impermissible. However, it would be prohibited to disadvantage customers based on gender, origin, or religion.
When traditional, market-based price control shifts to data-driven individual price calculation, it becomes tricky. If retailers use personal data (e.g., browsing behavior, purchasing power, place of residence) to automatically set individual prices, Article 22 of the GDPR may be relevant, according to the expert. “The line from classic, purely supply-and-demand-oriented dynamic pricing to impermissible profiling is quickly crossed.”
The lawyer sees the practice as particularly critical when automated decisions significantly disadvantage consumers and no human intervention is planned. “This can certainly be the case if customers have to systematically pay inflated prices due to secretly created profiles, without any human being able to intervene to correct it.”
Is a Cookie Banner Sufficient as Consent?
Is a general click on “Accept all cookies” enough to legally justify personalized prices? According to the lawyer, no. “The user must be clearly informed that their collected data is specifically used for the individual calculation of their prices.”
And there’s more. Since the implementation of the Omnibus Directive of the European Union, transparency obligations exist in online commerce. “If retailers offer consumers a price online that is personalized based on automated decision-making, they must clearly and understandably inform the customer of this before the contract is concluded.” Completely secret surveillance pricing is therefore simply illegal, according to Prof. Solmecke.
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These Are the Rights Consumers Have
Prof. Solmecke sees several protection options for consumers. “Consumers have strong defensive rights under the GDPR, particularly the right to information under Article 15 and the right not to be subject to a decision based solely on automated processing,” he explains. Additionally, compensation claims may exist in the event of violations.
It should also be mentioned that the practice can have significant consequences for companies. Solmecke: “Retailers who illegally personalize prices expose themselves to significant risks of fines and compensation claims.” Possible actions include proceedings by data protection authorities, warnings, and claims by affected consumers.
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How Can You Protect Yourself from Surveillance Pricing?
The processes mostly run in the background. Therefore, it is hardly possible for users to fully protect themselves from surveillance pricing. However, what you can do is reduce your data trails and thus weaken the basis for price profiles.
It is helpful to limit tracking, such as rejecting cookies, disabling personalized advertising, and adjusting privacy settings in the browser. Even when using incognito or private mode, search and history data are not permanently stored. Additionally, it may be useful to check offers without being logged in and to regularly clear the cache.
Lastly, it can always help to compare prices on different devices or networks, as offers may vary depending on the user profile. Visiting price comparison portals is also worthwhile.