The Day Advertising Killed Customer Loyalty

Here’s my dramatic opinion, and I’m not walking it back: surveillance pricing is going to be the thing we point to when we explain why customer loyalty died. Not bad service. Not inflation. Not some TikTok trend toward “deinfluencing.” The moment brands took the exact same data pipes built to target you with ads and repurposed them to figure out the maximum price you’d tolerate, they broke the deal that loyalty was ever built on. You stay loyal to a brand because you trust it’s not treating the next customer any better than it treats you. Once that trust is gone, loyalty isn’t a strategy anymore. It’s just inertia, and inertia doesn’t survive the first bad experience. Who is going to stay loyal to a hotel brand that charges you more because you’re a loyal customer using the app and booking for tomorrow? Should I be loyal to Uber for my airport runs when they change me up to 20% more than my spouse who schedules the same route at the same time but never uses Uber? Loyalty will die!

What Surveillance Pricing Actually Is

Surveillance pricing means a company uses your personal data, things like your location, browsing history, device type, income estimate, your physical location to the store, purchase history, or shopping habits, to set a price just for you instead of one price for everyone. FTC Chairman Andrew Ferguson put it plainly when the agency proposed new disclosure rules this August: “When consumers see a listed price, they expect it to be the same price that everyone else sees, not the retailer’s estimate of how much they are willing to pay based on their personal data”.

That’s the whole scam in one sentence. The price tag used to be a fact. Now it’s a guess about you specifically, and the guess is always aimed up, never down.

Same Pipes, Different Purpose

Nobody built new infrastructure to do this. That’s what makes it so unsettling if you’ve spent any time in the ad business. The tracking pixels, device fingerprints, geolocation pings, beacons, and browsing behavior that ad platforms use to decide which ad you see are the exact same signals now deciding what price you see. Ad targeting asks “which message converts this person.” Surveillance pricing asks “what’s the most this person will tolerate.” Same data, same models, completely different intent. One tries to serve you something relevant. The other tries to extract more from you than the next shopper.

The Future of Privacy Forum caught this shift too, pointing out that companies are stuffing what they’re calling “data-driven pricing” into the same AI governance frameworks that used to just handle ad personalization. They didn’t need to build anything new. They just pointed the existing machine at a new target: your wallet instead of your attention.

The Receipts Are Already Public

This isn’t theoretical. It’s been happening in plain sight for over a decade, and it’s accelerating at a massive scale.

Read that Instacart number again. Twenty-three percent, for the same eggs, the same store, the same day. Tests of Ubers system have produced up to 50% price differences for same route at the same time. That’s not the market moving with supply and demand. That’s a model that decided you, personally, would tolerate paying more than your neighbor based on your personal information.

The “Loyalty Tax” Is a Real Term Now

Here’s the part that should worry every brand that’s ever run a loyalty program. Surveillance pricing systems tend to charge more to the customers who are least likely to shop around, which usually means your most loyal ones. Bob Ghafouri, managing director at A&MPLIFY, coined a phrase for this that I think is going to stick: the loyalty tax. His warning is blunt: “Squeezing an extra 5% out of a transaction today can cost you 100% of that customer’s future lifetime value.”

Jeannie Walters, founder of Experience Investigators, framed the psychology of it even better: “If people feel like the price is based on ‘who I am’ instead of what the product costs, that feels really icky.” She’s right, and it explains the behavior we’re already seeing. Shoppers are checking prices across multiple devices, browsing in incognito mode, timing their purchases, and in hospitality specifically, booking a hotel room, canceling it, and rebooking just to see if the price drops. I’m a Marriott elite status member and I’ve booked and rebooked under my wife’s name from her cell phone to save more than 20% over my booking their my Marriott app. None of this is advancing loyalty. That’s a customer treating a brand like an adversary they need to outmaneuver.

Even loyalty programs themselves are getting caught in the backlash. A recent New York Times opinion piece pointed out that loyalty programs have “all too often become data-extraction mechanisms,” where customers hand over personal information in exchange for benefits that “may or may not be genuine.” The same piece cites a former Washington Post reporter who pulled his own data from Starbucks and found something brutal: the more he visited the coffee chain, the fewer discounts he received. Frequency, the exact thing loyalty programs are supposed to reward, was instead being used against him.

That’s the whole thesis in one anecdote. The system saw a loyal customer and used that loyalty against him instead of protecting it.

Regulators Smell It Too, Which Tells You Something

You know a practice has crossed a line when lawmakers start moving faster than the companies doing it. In 2026 alone, Maryland, Connecticut, and New Jersey all passed laws banning surveillance pricing for groceries, with New Jersey’s law carrying penalties up to $50,000 per violation plus treble damages. More than 40 bills are pending across two dozen-plus states. New York passed its own ban in June. California’s Attorney General launched an investigative sweep in January targeting grocers, hotels, and retailers over the practice.

At the federal level, the FTC voted this August to release a draft enforcement policy that would treat undisclosed personalized pricing as a likely violation of the law against deceptive practices, and it flagged red flags like delivery apps charging more for milk because a household has multiple kids, or hotels charging more because a customer’s data shows they’re traveling for a funeral. Consumer Reports policy analyst Grace Gedye summed up the public mood: “Nobody should have to pay more for groceries or other essential goods because a company knows what they’re searching for online, what their income is, the makeup of their household, or where they go”.

Notice what the FTC isn’t doing, though. It’s not banning the practice outright. It’s requiring disclosure. Which means the legal fix on the table right now comes down to this: keep doing it, just tell people you’re doing it. I don’t think that saves loyalty. If anything, forcing companies to admit “yes, we priced this specifically for you” could speed up the trust collapse rather than slow it, because right now most people don’t even know it’s happening to them. Once they do, and they will, the reaction won’t be gratitude for the transparency. It’ll be resentment.

Why This Is the Event, Not Just a Trend

Loyalty has survived a lot. Bad customer service, product recalls, price hikes tied to inflation, even scandals. It survives those because customers can rationalize them as external, temporary, or shared across everyone equally. Surveillance pricing is different because it’s none of those things. It’s internal to the brand’s own decision-making, it’s permanent if the data pipeline exists, and by definition it is not shared equally. Somebody else, right now, is paying less than you for the identical product, and the company decided that on purpose.

That’s the mechanism that ends brand loyalty for good. Not because customers get angry once. Because the entire premise of loyalty, that sticking with a brand gets you treated at least as well as anyone else, is gone. What replaces it is what we’re already watching happen: incognito browsing, device switching, cancel-and-rebook behavior, and a generation of shoppers who assume every price they see is a number engineered against them specifically. The ad industry spent twenty years training consumers to accept being tracked in exchange for relevance. Surveillance pricing just cashed that trust in for margin, and it’s not coming back.

Frequently Asked Questions

What is surveillance pricing?
Surveillance pricing is when a company uses your personal data, such as location, browsing history, device type, or shopping behavior, to set an individualized price for you rather than a single price for all shoppers.

Is surveillance pricing illegal?
It isn’t banned outright at the federal level. The FTC’s proposed August 2026 policy would make undisclosed personalized pricing a likely violation of deceptive practices law, but disclosed personalized pricing isn’t automatically prohibited Reuters. Several states, including Maryland, Connecticut, New Jersey, and New York, have passed outright bans, mostly focused on groceries.

How is surveillance pricing different from dynamic pricing?
Dynamic pricing changes prices for everyone based on demand, inventory, or timing, think airline fares or rideshare surge pricing. Surveillance pricing sets a different price for you individually based on data about who you are, not market conditions.

Does surveillance pricing hurt loyal customers more?
Often, yes. Systems tend to charge more to customers who are least likely to switch or shop around, which frequently describes a brand’s most loyal buyers, pattern industry analysts now call the “loyalty tax.”

Can I avoid being charged a surveillance price?
Some shoppers try browsing in incognito mode, checking prices across multiple devices, clearing cookies, or comparing prices while logged out, though there’s no guaranteed way to see the “standard” price a company would otherwise charge without any personal data.