Colorado’s proposed surveillance pricing bill will not become law this year after Governor Jared Polis vetoed HB 26-1210, a closely watched proposal that would have restricted the use of personal data in individualized pricing and wage-setting decisions.

For ecommerce businesses, the veto is an important development—and a significant win for businesses that rely on personalization, loyalty programs, targeted promotions, and other data-driven tools to engage customers and compete online.

The decision also represents the latest chapter in a growing national debate over so-called “surveillance pricing,” a concept that has attracted increasing attention from privacy advocates and lawmakers in several states. As the Ecommerce Innovation Alliance (EIA) discussed in our previous coverage of Colorado’s proposal, as well as Pennsylvania’s HB 1942, the challenge is distinguishing between harmful uses of personal data and the everyday personalization practices that consumers have come to expect from modern ecommerce.

What the Bill Would Have Done

As we discussed in our earlier coverage, HB 26-1210 sought to restrict the use of personal data in algorithmic pricing and wage-setting decisions.

Supporters argued the bill would protect consumers from being charged different prices based on personal information or behavioral data. Opponents, however, warned that the bill’s broad language could capture legitimate ecommerce practices such as personalized discounts, loyalty rewards, targeted promotions, product recommendations, and retention marketing.

Violations would have been enforceable under the Colorado Consumer Protection Act, creating potential liability for businesses that rely on personalization tools to tailor offers and improve customer experiences.

While the bill was aimed at preventing harmful “surveillance pricing,” critics argued that it failed to clearly distinguish between discriminatory pricing practices and the types of personalization that help consumers discover products, receive relevant offers, and save money.

Why EIA Opposed the Bill

The EIA formally urged Governor Polis to veto HB 26-1210. In a letter sent to the Governor’s office, President & CEO David Carter warned that the bill’s broad definitions and private right of action could expose ecommerce businesses to abusive litigation while discouraging the personalized offers and loyalty incentives consumers routinely benefit from. 

EIA’s concern was never that policymakers should ignore harmful uses of consumer data. Rather, we were concerned that bills like HB 26-1210 risk treating legitimate personalization tools the same as genuinely problematic conduct.

Most ecommerce businesses use customer data to improve shopping experiences, deliver relevant offers, power loyalty programs, reduce marketing waste, and help consumers find products they actually want. These practices have become a standard part of digital commerce and are especially important for small and medium-sized businesses competing against larger retailers with significantly greater resources.

The concerns raised by Colorado’s proposal were similar to those EIA highlighted in our opposition to Pennsylvania’s HB 1942. In both cases, lawmakers sought to address concerns about algorithmic pricing and personalization, but the proposals raised questions about whether broad restrictions could unintentionally disrupt common retention marketing practices, increase compliance costs, and create legal uncertainty for businesses that are not engaging in harmful conduct.

Why Governor Polis Vetoed the Bill

Governor Polis ultimately agreed that the bill’s approach was too broad. In his veto message, Polis said the proposal could create unintended consequences for consumers and businesses alike. While acknowledging concerns about discriminatory uses of technology, he argued that the bill could place legitimate discounts and savings programs at risk.

According to reports, Polis specifically warned that the legislation could subject “perfectly acceptable” consumer discounts to scrutiny under the Colorado Consumer Protection Act and said that Colorado should be encouraging opportunities for consumers to save money rather than creating uncertainty around commonly used pricing and rewards practices.

The governor also pointed to other recently enacted Colorado legislation that addresses concerns surrounding automated decision-making and discrimination without imposing the broader restrictions contained in HB 26-1210.

In short, Polis did not reject concerns about the use of data and algorithms. Instead, he rejected this particular approach, concluding that it risked sweeping in beneficial consumer-facing practices while attempting to address harmful ones.

Reactions to the Veto

Business groups largely welcomed the governor’s decision. The National Retail Federation praised the veto, arguing that the bill could have restricted discounts, coupons, loyalty rewards, personalized savings programs, and other tools that help consumers lower costs. NRF said policymakers should focus on addressing actual harms without limiting practices that benefit shoppers.

The Chamber of Progress also supported the veto. Policy Manager Drew Ambrogi stated:

“No one should pay higher prices based on their identity, but this bill went way beyond that and would have banned personalized discounts that help Coloradans make ends meet.”

Other business organizations similarly argued that the bill’s broad language risked creating legal uncertainty around common promotional and customer engagement practices.

Privacy advocates strongly disagreed with the governor’s decision. EPIC called the veto “an unfortunate setback” and argued that the legislation would have protected consumers from differential pricing based on personal data. The organization has already urged lawmakers to revisit the issue in future legislative sessions and continues to advocate for similar restrictions in other states.

What Happens Next?

While HB 26-1210 is dead for now, the broader debate over surveillance pricing is far from over.

Lawmakers, regulators, and advocacy groups across the country continue to scrutinize how businesses use data, algorithms, artificial intelligence, and personalization technologies. Similar proposals have emerged in multiple states, and privacy advocates are likely to continue pushing for new restrictions on algorithmic pricing and automated decision-making.

For ecommerce businesses, the Colorado veto is an important reminder that policymakers are paying increasing attention to the technologies that power modern commerce. The challenge moving forward will be ensuring that efforts to address harmful practices do not inadvertently undermine the personalization tools, loyalty programs, and targeted offers that consumers value and businesses rely on every day.

As EIA has consistently argued, policymakers should focus on actual consumer harm rather than broadly restricting technologies that help businesses compete and consumers save money. Governor Polis’ veto reflects that balance, but the policy debate is likely to continue in Colorado and beyond.

Join the EIA today to help strengthen and shape policies that affect all ecommerce businesses. Together, we can continue to create the future of ecommerce. Subscribe to EIA email updates to stay informed on key developments and their impact on your business. 

Ecommerce Innovation Alliance provides members with analysis of litigation and regulatory developments affecting online commerce and digital marketing. This post is for informational purposes only and does not constitute legal advice.