Is your local grocery store spying on you, changing the prices on digital tags depending on who’s looking, and making you pay more than the person behind you in line just because they can?
Probably not. But one state has outlawed all of that anyway, to prevent any of it from happening now or in the future.
Maryland governor Wes Moore has signed into law the nation’s first ban on so-called “surveillance pricing” at the grocery store. The measure, passed overwhelmingly by the state legislature earlier this month, prohibits grocery retailers from “using dynamic pricing or an individual’s personal data to set higher prices.”
“At a time when our people are being squeezed by the cost of everything, especially groceries, Maryland is not just pushing back, but pushing forward,” Moore said at a bill-signing ceremony on Tuesday. “People deserve to know that their data will not be used against them to charge them more. And today, Maryland is putting an end to any forms of price manipulation.”
Maryland was one of several states to consider legislation, to regulate something that most retailers insist isn’t happening. The tipping point came a couple of years ago, when Walmart cheerfully announced that it would be replacing paper shelf tags in its stores with electronic shelf labels (ESLs) that can be updated remotely and instantly.
That raised alarm bells among alarmists, who fear that easily-adjustable digital price tags, plus all the personal data that grocery stores have on us, would be a bad combination. That set off a flurry of proposed laws to ban retailers from using personal data and digital price tags to charge different prices to different shoppers.
“The change to electronic shelf labels creates the potential for ‘dynamic pricing,'” Moore’s office warned when proposing Maryland’s measure earlier this year. “The cost of basic household goods could surge based on the time of day, the weather, or granular consumer data,” including details about “a consumer’s behavior or characteristics” such as race, gender or their ability to pay.
As passed, though, Maryland’s measure is a significantly-revised version of the original proposal, to the delight of some and the dismay of others. The version signed into law exempts loyalty program prices, it limits enforcement to the state and restricts shoppers’ ability to sue retailers if their data is misused, and it forbids only higher prices, raising the theoretical possibility that a retailer could use the very personal data that the law aims to protect, to offer some favored shoppers a discount while making everyone else pay more.
Those changes are just fine with the Maryland Retailers Alliance, which initially opposed the measure. “The final bill reflects a workable framework that achieves the stated policy goal of prohibiting the use of consumer data to increase prices while preserving the ability for retailers to offer discounts and promotions that benefit consumers,” the group said in a statement.
Other groups are not as pleased. The bill that the governor signed yesterday “falls short of adequately protecting consumers,” Consumer Reports senior policy analyst Grace Gedye said in a statement. “While it’s encouraging to see the Maryland legislature take up this issue, this bill has loopholes that will limit its real-world impact.”
The United Food and Commercial Workers International Union was even more displeased. “Maryland lawmakers have abandoned families struggling with high costs at the grocery store,” UFCW International Vice President Ademola Oyefeso said in a statement. “Banning ESLs and laws that truly protect people from surveillance pricing are the only way to lower grocery prices and keep them predictable.” The union urged the governor, to no avail, to veto the bill and send it back to the drawing board. “Legislators have left massive corporations like Walmart an opening to price-gouge and exploit these well-meaning regulations,” Oyefeso said.
Indeed, other lawmakers outside Maryland have proposed even more far-reaching regulations, such as banning the use of electronic shelf labels altogether. That’s even though industry groups like FMI — The Food Industry Association insist that digital tags do more good than harm. “Contrary to some claims, grocers do not use ESLs for surge pricing or surveillance-based pricing,” the group recently reassured shoppers. Instead, “ESLs are used to maintain pricing accuracy, reflect promotions quickly and provide better information to customers.”
Some supporters of Maryland’s measure say it’s more about getting ahead of what might happen, than regulating what is currently happening. “As the world gets ever more sophisticated and we fight the battles to come of what AI is going to do to our society,” Maryland state Senate president Bill Ferguson said, “Maryland is leading the way to put thoughtful, reasonable protections in place to allow for innovation, but also to make sure that it does not harm us.”
So digital price tags aren’t going anywhere in Maryland. Grocers will still be able to use personal data to tailor prices and promotions to loyalty program members. And if a store uses your personal data to overcharge you, there’s nothing you can do other than hope the state enforces its own law.
To those opposed to “surveillance pricing,” though, it’s a start. “We urge other state legislatures considering personalized pricing legislation to build in stronger consumer protections and avoid loopholes that weakened this bill,” Consumer Reports stated.
Maryland’s measure is due to take effect on October 1st. After that, the battle over dynamic pricing is expected to continue. Maryland may have become the first to regulate it – but as the debate goes on, it’s unlikely to be the last.
Image source: Office of Maryland Governor Wes Moore
I do not have a phone that reads the electronic price tags, ao how will I even know what the price is for a can of soup? Everyone’s not able to do these phones without learning how, and I’ve never had the chance to have one or learn how to use one.This is a slap to Seniors who cannot afford such a phone.