WHAT THIS BILL REGULATES · 1 REQUIREMENT TYPE
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
(1) "Automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1)" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.
(2) "Surveillance dataSurveillance data"Surveillance data" means data obtained through observation, inference, or surveillance of an individual that is related to the characteristics, behaviors, salaries, or biometrics of the individual or a group to which the individual belongs.§ 554J.1(2)" means data obtained through observation, inference, or surveillance of an individual that is related to the characteristics, behaviors, salaries, or biometrics of the individual or a group to which the individual belongs.
Section 554J.1 establishes the two key defined terms for the chapter. Automated decision-making system is defined broadly as any system using AI or algorithms to make decisions or predictions with little or no human intervention. Surveillance data encompasses data obtained through observation, inference, or surveillance related to an individual's characteristics, behaviors, salaries, or biometrics — or those of a group to which the individual belongs. The surveillance data definition is notably broad, capturing inferred data and group-level behavioral data, not just directly observed individual data.
(1) 1 A person shall not use an automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1) to alter the price of a product or service for a specific individual based on surveillance dataSurveillance data"Surveillance data" means data obtained through observation, inference, or surveillance of an individual that is related to the characteristics, behaviors, salaries, or biometrics of the individual or a group to which the individual belongs.§ 554J.1(2).
(2) 1 A person that violates this section commits an unfair practice under section 714.16 and under chapter 714H.
Section 554J.2 contains the bill's core prohibition and its enforcement hook. Subsection 1 prohibits any person from using an automated decision-making system to alter the price of a product or service for a specific individual based on surveillance data. The prohibition targets individualized, surveillance-driven pricing — it does not reach uniform algorithmic pricing or pricing based on publicly available market data. Subsection 2 classifies a violation as an unfair practice under both Iowa Code § 714.16 (consumer fraud, AG enforcement) and chapter 714H (private action), providing dual enforcement pathways.
This chapter does not apply to the use of an automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1) to alter the price of a product or service for a specific individual for any of the following reasons:
(1) Due to the difference in costs to provide a product or service to a specific individual.
(2) Due to a bona fide discount that is widely available to members of the public, including but not limited to membership discounts, military and student discounts, senior discounts, and discounts due to a special event.
(3) When the person using an automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1) is an insurer using the automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1) to determine the amount a consumer must pay for an insurance policy or contract.
(4) When the person using an automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1) is using the automated decision-making systemAutomated decision-making system"Automated decision-making system" means a system that uses artificial intelligence or algorithms to make decisions or predictions with little or no human intervention.§ 554J.1(1) to determine whether to extend a line of credit to, or refuse to enter into a transaction with, an individual based on data provided in a consumer report covered by the federal Fair Credit Reporting Act, 15 U.S.C. §1681 et seq.
Section 554J.3 carves out four categories of conduct from the chapter's prohibition. Cost-justified differential pricing — where the price difference reflects actual cost differences in serving a specific individual — is excepted. Bona fide publicly available discounts, including membership, military, student, senior, and special-event discounts, are also excluded. Insurance pricing by insurers and credit decisions based on FCRA-covered consumer reports are exempt entirely. The insurance and credit exemptions are notable because they remove two of the most common use cases for algorithmic pricing from the bill's scope.
2 The attorney general shall adopt rules pursuant to chapter 17A to implement and enforce this chapter.
Section 554J.4 directs the attorney general to adopt rules under Iowa Code chapter 17A (the Iowa Administrative Procedure Act) to implement and enforce the chapter. This is a mandatory rulemaking directive, not a discretionary authorization — the statute uses "shall adopt." The rulemaking will likely fill gaps the bill leaves open, including the precise contours of the surveillance data definition and the scope of the exceptions.
(t) It is an unlawful practice for a person to violate section 554J.2.
This section amends Iowa Code § 714.16, subsection 2, by adding a new paragraph designating a violation of § 554J.2 as an unlawful practice under the state's consumer fraud statute. This is the enforcement integration provision that enables the attorney general to use the full suite of § 714.16 remedies — injunction, restoration, disgorgement, and civil penalties up to $40,000 per violation — against persons who engage in surveillance-based algorithmic pricing.
(0f) Section 554J.2.
This section amends Iowa Code § 714H.3, subsection 2, by adding a new paragraph incorporating § 554J.2 into the private cause of action framework under chapter 714H. This enables individuals harmed by surveillance-based algorithmic pricing to bring private suits, in addition to attorney general enforcement under § 714.16.