Maryland Becomes First State To Ban ‘Surveillance Pricing’ in Grocery Stores

Maryland is poised to become the first state in the nation to outlaw “surveillance pricing” in retail grocery stores following the passage of the Protection from Predatory Pricing Act.Governor Wes Moore, a Democrat, has committed to signing the legislation, which specifically targets the practice of what is commonly known as dynamic pricing — charging different shoppers different prices for the same item at the exact same time, based on vast amounts of harvested personal data. Consumer advocates have long warned that these dynamic pricing models manipulate consumers and inflate the cost of essential goods. Consumer Reports, which heavily lobbied for the bill, has extensively tracked how major retailers and delivery apps use these algorithmic models. Placing the spotlight firmly on the power imbalance between corporations and consumers, a senior policy analyst at Consumer Reports, Grace Gedye, highlighted the invasive nature of the new technology.“Surveillance pricing can drive up the price of food. Retailers have a lot of data about individual shoppers: how often we search for or hover over particular items; whether we live near competitor stores; inferences about our likes and dislikes, our dietary needs, our income, our family size, and more. Surveillance pricing allows companies to take advantage of that information asymmetry and charge you as much as they think you’re individually willing to pay,” Ms. Gedye said.The tangible impact of the technology was recently laid bare by a major Consumer Reports investigation into Instacart’s algorithmic pricing experiments. During the investigation, CR directed nearly 400 consumers to shop for the identical basket of goods at the exact same time. The resulting data analysis suggested that consumers were paying different prices for the exact same products from the same store at the same time. These pricing discrepancies reached as high as 23 percent for certain items, an algorithmic markup that could cost a family over $1,200 annually.Following the report, Instacart announced it would end the specific program resulting in different grocery prices for different shoppers, though it continued to allow retail partners to test various promotions. A separate CR probe into Kroger found the grocery chain collecting huge data profiles to make inferences about shoppers’ education levels, income, and family size. One customer who requested their data received a 62-page profile filled with predominantly incorrect assumptions.The new Maryland law, which will go into effect on October 1, aims to curb aggressive data-harvesting and price-setting loops. The act requires grocery stores to keep their item prices fixed for at least one business day, effectively halting price spikes by the hour — or even the minute. It also explicitly prohibits retailers from using surveillance data — such as ethnicity, shopping habits, or income — to tailor individual pricing.Governor Moore championed the legislation as a necessary safeguard against corporate overreach. “At a time when Marylanders are already stretched by the rising cost of groceries, housing, and everyday necessities, we must ensure that new technologies are not used to drive up the bill for working families,” he said.Despite the historic nature of the ban, consumer advocates say the final draft of House Bill 895 was heavily watered down following opposition from the Maryland Retail Alliance. Several exemptions were added to the bill that severely undercut its effectiveness.Notably, the legislation exempts pricing associated with loyalty and membership programs, allowing retailers to charge higher prices through these systems. It also exempts subscription-based purchases and applies the ban only to using personal data to set higher prices without establishing a standard baseline price — meaning a retailer could theoretically market every customized price as a “discount.”Furthermore, the enforcement provisions limit direct consumer action. Shoppers are not permitted to sue companies over surveillance pricing. The Maryland attorney general holds the sole authority to bring suits and is required to give companies a 45-day notice to fix violations before facing fines of $10,000 for a first offense and $25,000 for subsequent violations.“While it’s encouraging to see the Maryland legislature take up this issue, this bill has loopholes that will limit its real-world impact. We urge other state legislatures considering personalized pricing legislation to build in stronger consumer protections and avoid loopholes that weakened this bill,” Ms. Gedye said.Maryland’s legislative push reflects a broader, nationwide movement to regulate opaque algorithmic practices. California recently enacted a law prohibiting the use of common pricing algorithms that ingest competitor data to set prices, while New York has successfully defended its Algorithmic Pricing Disclosure Act, which requires businesses to inform customers when their personal data is used to set a price. Dozens of similar bills are moving through statehouses across the country as lawmakers scramble to catch up with rapidly advancing predictive technologies.

Maryland Becomes First State To Ban ‘Surveillance Pricing’ in Grocery Stores

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