Legal Insights

That'll cost extra: Dynamic pricing and why your algorithm might need a lawyer

Shaun Temby
Kate Morel

• 24 August 2026 • 6 min read

From concert tickets to the rideshare home afterwards; from airline tickets and the hotel rooms when you arrive; and also tickets to a wide variety of entertainment, consumers are faced with a slow but seemingly inexorable creep of dynamic pricing into their lives. Global businesses are increasingly utilising real-time market data and innovative algorithms to set the price for goods and services.

At times, as consumers, we can feel powerless to push back against, or seek protection from, these changes. Fortunately, however, in Australia this practice is not entirely unregulated, and businesses using or looking to implement dynamic pricing must be careful to comply with these protections, particularly as heightened public and regulatory scrutiny and cost-of-living concerns remain front of mind for their customers.

What is dynamic pricing?

Dynamic pricing is commonly understood as the practice of adjusting the price of a product or service based on real-time factors such as demand, supply, time of day, inventory levels or even the customer's own browsing behaviour. The Australian Competition and Consumer Commission (ACCC) defines dynamic pricing more precisely as the adjustment of a good or service's price during the purchasing process. It is not new, as airlines, hotels and ride-share apps have used variations of this practice for years; however, the growing sophistication of algorithms and access to consumer data has made it far more visible, arguably more aggressive and, in the eyes of many consumers, far less palatable. This specific practice becomes even more contentious when a consumer is quoted, or comes to expect, one price and then finds it has climbed – sometimes substantially – by the time they reach checkout, often without a clear explanation of why.

What are current consumer protections?

In Australia, consumers benefit from significant economy-wide protections against a multitude of unfair and dishonest practices enshrined in the Australian Consumer Law (ACL) and vigorously regulated by the ACCC. While dynamic pricing is not explicitly prohibited under the ACL, several existing protections in the ACL can, in certain circumstances, transform otherwise legal pricing practices into prohibited and unlawful conduct. Specifically:

First, the ACL’s most frequently invoked prohibition is against misleading or deceptive conduct, which focusses on conduct that creates a false or misleading impression about price. Dynamic pricing can contravene this broad prohibition if coupled with an advertised price for the product or service that bears little resemblance to the price most customers will actually pay when mandatory fees and various dynamic surcharges are taken into account.
Second, where a price is advertised, the ACL requires (in most instances) that businesses must display the single total price payable by a consumer, inclusive of all mandatory charges, to acquire the advertised product or service. Dynamic pricing adjustments are at greatest risk when surge adjustments take the form of additional fees or charges layered throughout the purchasing journey.
Third, the ACL prohibits unconscionable conduct – regarded as conduct that is against conscience by reference to societal norms and will usually involve exploitation, unfair pressure, vulnerability, or a significant imbalance of bargaining power. In considering the types of conduct that might breach this part of the ACL, the Act expressly contemplates a "system of conduct or pattern of behaviour", not merely isolated incidents, which is clearly relevant to some forms of dynamic pricing.
Fourth, the unfair contract terms (UCT) regime does not prohibit dynamic pricing itself; however, contractual terms that permit one party to vary prices unilaterally without corresponding rights for consumers are likely to be unfair (in the absence of a legitimate business reason for this practice).
Fifth, the ACL’s new unfair practices regime presents the greatest risk to companies that use dynamic pricing. Australian Government consultation papers and legislative materials have specifically identified dynamic pricing, drip pricing, hidden fees, manipulation of consumer choice and digital "dark patterns" as examples of concern. The proposed regime is intended to capture conduct that unreasonably manipulates consumers or unreasonably distorts consumer decision-making.

Possible examples of unlawful dynamic pricing

Situational vulnerability

Conduct that is most likely to be unconscionable might arise when a company's algorithm detects that a consumer needs its goods or services during an emergency (such as an extreme weather event) and then automatically jacks up prices while that event continues.
Personalised exploitation

An online health services provider uses consumer data to identify people who have recently searched for potentially embarrassing medical-related topics – such as male patterned baldness, weight loss or erectile dysfunction. The service provider’s algorithm automatically quotes significantly higher prices to those consumers because they may be less likely to shop around.
“Take it or leave it” pressures

A ticketing platform tells consumers that tickets are available for $150. After the consumer has invested 30 minutes selecting seats and entering details, the platform dramatically increases the price to $320 while simultaneously displaying countdown timers and warnings such as "only 30 seconds left". A court may regard the overall system, rather than the price change, as constituting unconscionable conduct if it exploits consumers’ ‘sunk costs’ in the buying process and, in doing so, applies psychological pressure to the consumer.
“Surge fees” added late in the buying process

A taxi app initially displays an airport trip at $45; however, after the passenger clicks "confirm" but before travel begins, it adds a demand-based "market adjustment fee" of $20. If that fee is mandatory and could have been calculated when the price was originally presented to the consumer, the initial representation may fail the single price requirement. Even when the surcharge is dynamically calculated, once it is known and unavoidable, businesses generally need to present the total single price.
Unlimited price variation rights

If a streaming service contract states, “We may change the subscription price at any time for any reason without notice." and the consumer is locked into the contract without a termination right, then such a contractual term may be vulnerable to challenge under the UCT regime.
Price increases at checkout

If a consumer spends 20 minutes ordering a product or service or choosing options for that product and service and then is presented at the final payment screen with a message that "Due to high demand, the price has increased by 18%", the consumer might feel compelled to proceed due to the time and effort involved in the buying process – which could make the process unfair and, therefore, unlawful.
Artificial scarcity

A booking platform secretly inflates prices each time a consumer revisits the same accommodation listing, while displaying statements like, “15 people are viewing this room" or "Only one room left", when those statements are not genuinely reflective of demand. While that practice is likely to constitute misleading and deceptive conduct, it may also be an unfair practice because it combines dynamic pricing with a manipulative system design.
Personalised “willingness to pay” pricing

If a website uses extensive behavioural data to identify consumers who are less price-sensitive and quietly presents them with significantly higher prices than other consumers, this may also be an unfair practice – particularly if the website materially distorts consumer choice through information asymmetry or manipulation.

What are the risks if you get it wrong

Penalties for breaching the ACL are substantial: corporations face whichever of the following is greatest: up to $100 million per breach, three times the benefit gained from the conduct, or 30% of adjusted turnover during the breach period. Add to this the practical risks of an ACCC investigation and prosecution, and the cost of getting this wrong is high. Offenders face substantial civil penalties, consumer redress orders, publication orders, compliance programmes and the ever-present threat of follow-on class actions.

Reputational risks are also significant, with businesses in the events sector already providing some excellent examples of the costs of getting this wrong. For example, the ticketing platforms that used dynamic or "in demand" pricing for high-profile tours faced sustained public backlash, adverse media coverage, and lasting damage to brand trust even when their conduct was lawful. In a market where consumer trust is hard-won and easily lost, the court of public opinion can move faster, and hit harder, than any regulator.

What businesses should be doing now

Businesses should take the opportunity now to review their pricing strategy and processes. Particularly, businesses need to know and understand:

how prices are communicated to consumers and whether those prices are genuinely final and clear at every stage of the purchase journey;
how their consumer data is being used to inform pricing; and
whether any marketing messaging reflects reality or risks being seen as manufactured pressure.

Dynamic pricing is a legitimate and valuable tool for businesses to manage demand and maximise revenue – but only when built on a pricing process that can withstand legal and public scrutiny. With current legal protections, further reforms commencing in July 2027, and the ACCC continuing to watch this space closely, there has never been a better time for businesses to get ahead of the risk.

If your business uses dynamic pricing, or is considering it, contact us to review your pricing model and processes for compliance with the ACL now and in the future.

Consumer Markets

Shaun Temby

Shaun has over two decades of expertise in commercial disputes, competition, and consumer law and provides strategic legal solutions to franchising and consumer markets clients.

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