Maryland has become the first state in the US to ban surveillance pricing in grocery stores.
Maryland’s law bans grocers and third-party delivery services from using a person’s personal data to set higher prices. Wes Moore, the governor, signed the measure into law on Tuesday. “At a time when technology can predict what we need, when we need it, when we’ll pay for it and also – when we’ll pay more for it, and at a time when we’re watching how big companies are then using these analytics against us to make record profits, Maryland is not just pushing back. Maryland is pushing forward because we are going to protect our people,” Moore said at the bill signing ceremony.
When engaging in surveillance pricing, stores rapidly change the cost of products based on consumer data, including their location, internet search history and demographics. That means buyers are paying different prices for the same items purchased around the same time. Critics of this method – also known as dynamic pricing – say that in doing so, businesses are effectively charging each person the most that they’re willing to pay.
While Maryland’s new law focuses on grocery stores, the Federal Trade Commission (FTC) has documented examples of surveillance pricing in stores selling clothing, beauty products, home goods and hardware. Consumer groups note there is an added urgency when it comes to grocery stores, though, given that they affect Americans’ ability to access affordable food.
Bills being considered in Colorado, California, Massachusetts, Illinois and New Jersey may likewise regulate surveillance pricing. The US federal government has weighed in as well. The Federal Trade Commission, under the Biden administration, opened an investigation into these pricing practices and published initial findings from a study last January that found companies use an expansive range of personal data in setting varying prices for buyers. But it’s unlikely the current administration will crack down on surveillance pricing, given that the current FTC chair, Andrew Ferguson, characterized the previous administration’s report as a rush job. It’s in this context of federal inaction, that states like Maryland need to take action says Tom McBrien, counsel at the Electronic Privacy Information Center (Epic).
Anti-surveillance advocates say the new law is riddled with industry carveouts that will make it harder to protect consumers. They welcomed Maryland’s focus on the practice but say they are concerned about loopholes inserted as a result of industry lobbying. “We’re excited Maryland took this step but we do have serious concerns,” McBrien says. “The exemptions allow other ways of arriving at the same outcome that are just harder for consumers to detect.”
Maryland’s law includes exemptions for loyalty programs and promotional offers. While the law bans setting higher prices through surveillance pricing, it doesn’t address reducing prices. If a company raises its prices for everyone, and then offers individualized discounts, “suddenly you’ve arrived at the same outcome,” McBrien says.
Consumer Reports, a non-profit which investigated Instacart’s pricing, said in a statement that it appreciated Moore prioritizing the issue but decried the law’s “weak enforcement provisions”.
“We urge Maryland lawmakers to revisit the legislation next year to build in stronger consumer protections and remove loopholes that undermine the intent of this law,” it said. Instacart announced it would no longer be using technology that allows grocery stores to charge different shoppers different prices for the same groceries after a Consumer Reports investigation last year exposed the practice.
The harshest critics of Maryland’s new law believe it doesn’t just lack enforcement but erodes existing rights. They point, in particular, to a provision that only allows the state’s attorney general – and not individuals – to enforce the law. “The private right of action is a fundamental piece of accountability,” says Lee Hepner, senior legal counsel at the American Economic Liberties Project. “A meaningful threat of enforcement is the only effective deterrent to violating the law.”
“The biggest threat of the Maryland bill is that other states will see it as a model bill that they should replicate in their own jurisdictions,” Hepner says. “It is very important for us–as we try to get this legislation right in states from Colorado to California to New York–that the Maryland bill not be held up as a model, but in fact be recognized as an industry-written permission slip to engage in ongoing discrimination.”
