California Gas Stations Sued for Using AI to Inflate Prices

A federal lawsuit filed Monday in Sacramento accuses Kalibrate and several gas station operators, including Walmart and Albertsons, of using an AI pricing tool to artificially inflate gasoline prices in California. The suit alleges the software allowed companies to avoid competition, potentially raising prices by up to 30 cents per gallon in areas where the tool is widely used.

The legal action, first obtained by Bloomberg, targets Kalibrate Fuel Pricing. According to the suit, the tool requires gas stations to provide cost and volume data, which the software then uses to make pricing decisions for the operators.

Plaintiffs allege this process allows stations to avoid competing with nearby competitors and charge higher prices to consumers. The lawsuit specifically names Kalibrate’s parent company, Knowledge Support Systems, and various station operators who allegedly used the system.

How does the Kalibrate AI tool allegedly inflate prices?

The lawsuit claims the software includes a feature called “restoration.” According to the filing, this feature allows most stations in a specific market to implement large price hikes contemporaneously.

The suit asserts that Kalibrate’s algorithm is illegal under AB 325, a bill signed into law in 2025. This law prohibits the use of common pricing algorithms to restrain trade or commerce.

The plaintiffs argue the algorithm violates the law because it uses competitor data to influence, stabilize, align, and set gasoline prices.

Did You Know? The lawsuit identifies 1,732 stations in California maintained by companies that allegedly used the Kalibrate Fuel Pricing system.

Which gas stations are named in the lawsuit?

The suit identifies a wide range of operators using the system. This includes 1,000 ARCO stations, 400 Circle K stations, and 150 Speedways.

Slew Of California Gas Stations Illegally Used AI To Raise Prices, Lawsuit Claims

Other identified operators include 90 EG America stations, 51 stations owned by Albertsons, 25 Walmart or Sam’s Club fueling stations, and 16 TravelCenters.

California currently has the highest gasoline prices in the country, with an average of $5.52 per gallon as of Monday, according to data from GasBuddy.

Expert Insight: Samantha Carter notes that the core of this dispute rests on whether AI-driven “alignment” constitutes a tool for efficiency or a mechanism for illegal price stabilization. If the court finds that the “restoration” feature effectively removes price competition, it could set a strict precedent for how AI is deployed in retail pricing across the state.

What may happen next in the legal process?

The court will likely determine if the Kalibrate algorithm’s use of competitor data constitutes a restraint of trade under AB 325. A ruling could potentially force operators to abandon the software or change how it processes data.

If the allegations are proven, the companies involved could face financial penalties. Kalibrate did not immediately return a request for comment from Forbes.

Frequently Asked Questions

Who is being accused of inflating gas prices?
The lawsuit names Kalibrate’s parent company, Knowledge Support Systems, and operators of 1,732 stations, including brands like ARCO, Circle K, Speedway, Walmart, and Albertsons.

What is the “restoration” feature mentioned in the suit?
According to the lawsuit, “restoration” is a feature that allows multiple stations in a market to implement large price increases at the same time.

What law is the lawsuit based on?
The suit was brought under AB 325, a 2025 law that bans the use of common pricing algorithms to restrain trade or commerce.

Do you think AI-driven pricing tools should be regulated to prevent simultaneous price increases?