California Drivers May Get Relief from Alleged AI-Driven Price Gouging at the Pump

A recent lawsuit filed in the Eastern District of California accuses several major gas station operators of using AI-driven pricing software to manipulate fuel prices, resulting in higher costs for consumers. The lawsuit targets over 1,700 gas stations across the state, including well-known brands such as BP, Walmart, and 7-Eleven. According to the complaint, the use of this software has led to price increases of around 30 cents per gallon above what normal competition would have produced. The plaintiffs argue that this constitutes an illegal price-fixing scheme, orchestrated by the algorithmic pricing company Kalibrate and some of the state's largest fuel retailers. California has the highest average gas prices in the country, making even small increases from pricing software have a significant impact on drivers. The lawsuit claims that the gas companies have violated California law AB 325, which aims to crack down on algorithmic price fixing. The California Energy Commission's Division of Petroleum Market Oversight has put fuel refiners, distributors, and sellers on notice about AB 325, warning them to familiarize themselves with their legal obligations. The suit seeks compensatory damages and triple the damages caused, although it does not specify a dollar amount. This case highlights the growing concern over the use of AI-driven pricing software and its potential to harm consumers. As the use of such software becomes more widespread, lawmakers are taking steps to restrict its use, with California considering a ban on surveillance pricing, which involves setting prices based on personal information.