Maryland the first state to regulate grocery surveillance pricing

Surveillance pricing is when a retailer sets the price of something based on what they know about you: your address, your income, your interests, your 'demographic'. Lawmakers in Maryland made it the first state to "ban" the practice this week, though the legislation has conspicous loopholes and shields retailers from consumer lawsuits. For what it's worth, state governor Wes Moore immediately signed it into law.

"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 wrote in a press release.

A Federal Trade Commission study found that surveillance pricing, also known as dynamic pricing, is already in use: "Retailers frequently use people's personal information to set targeted, tailored prices for goods and services—from a person's location and demographics, down to their mouse movements on a webpage," wrote then-FTC chair Lina M. Khan.

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).

California, Massachussets, New York, Georgia, Ohio, and Illinois have also drafted bills to regulate surveillance pricing, but none have yet come to a vote. The United Kingdom empowered its Competition and Markets Authority to fine companies that use hidden or biased digital pricing in 2024.

Maryland's law is named The Protection From Predatory Pricing Act (HB 895), and prohibits…

a food retailer and a third-party delivery service provider from engaging in the practice of dynamic pricing or using consumer personal data to set a price for consumer goods or services; prohibiting a food retailer and a third-party delivery service provider from using protected class data to offer, advertise, or sell a consumer good or service under certain circumstances; making a certain violation of the Act an unfair, abusive, or deceptive trade practice that is subject to enforcement and penalties; etc.

But in the details, consumer advocates note, are various exemptions added to please industry lobbyists, including loyalty programs, "targeted discounts," and a sweet clause that means only the state can bring legal action against them and then only after giving them 45 days to stop.

Consumer Reports complained of the "weak enforcement provisions" and the lack of bite: "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."

Several provisions of the law undercut its ban on surveillance pricing, including:

Applying the ban only to using personal data to set higher prices without establishing any baseline or standard price (with no set standard price, everything can be marketed as a discount)

Applying the ban only to customized prices for individuals, but not hyper-specific segments of consumers (eg. "shoppers over 70, who live alone, don't live near competitor stores, and are interested in recliners"). Surveillance pricing for niche consumer segments has a similar impact in practice to individual-level pricing.

Exempting any pricing associated with a loyalty or membership programs — even if the prices offered through a loyalty program are higher

Exempting any pricing associated with purchases made on a subscription basis or in association with a subscription service

The fact that "products have set prices for all consumers" isn't the law means we've already lost and are just negotiating over how much the winners will take.