The Maryland bill, known as the Protection from Predatory Pricing Act, would prohibit food retailers such as grocery stores and third-party food delivery services from using personal data collected to set prices for consumer goods or services.
But according to George Slover, competition policy adviser at the Center for Democracy and Technology, the bill is not perfect. Slover testified before the Maryland Senate Finance Committee in February when the legislature was considering the bill, and he believes legislators missed some things in an effort to better protect consumers.
“On the one hand, when you read the first part of [the bill]“It bans surveillance pricing, or what we call bespoke pricing, despite it being in a very narrow sector of the economy,” Slover told Gizmodo.
That narrow area is food retailers, of course, leaving other businesses, whether clothing stores, airlines, or anything else, free to use surveillance pricing. Slover prefers the term bespoke pricing, although terms such as monitored pricing, dynamic pricing, or personalized pricing are becoming more common as the national vocabulary expands to talk about these strategies.
Dynamic pricing involves retailers changing prices based on broad criteria such as time of day or season. Consider the store that raises the price of cold water slightly when the outside temperature rises and theoretically there is greater demand. Surveillance pricing can be thought of as a cousin of dynamic pricing, which focuses more on customizing the price for a given consumer based on factors such as demographics, income or browsing history.
“The exceptions in the bill are not carefully worded,” Slover told Gizmodo. “So they’re going to expose loopholes that can be exploited to circumvent the intent of the law. Or at least the intent of the bill that we’re proposing.”
The Bill exempts loyalty programs, which do not need to be widely publicized and are not required to be uniform. And it discounts subscription services. Slover believes it is OK to grant exemptions, but says they are written so broadly into the new law that there is no way to ensure they are administered fairly.
“These are the kind of exceptions that exist in the bill as long as they’re clearly written,” Slover said, but he’s concerned they’re not clear.
Slover is also concerned that part of the bill exempts anything where a customer agrees to share their data in exchange for getting a new price, even if it is higher. He believes this section is written too “openly” and also allows retailers to take advantage of ambiguous wording.
Another problem is that it has a 45-day grace period, Slover said, meaning any grocery store or food delivery service can’t be held accountable for 45 days after a violation of the law. The law says the store can “cure” the violation, but Slover cautions, “It’s not clear what it means to cure.”
The law only allows the Maryland Attorney General to bring a lawsuit to enforce it. Slover said, “We wanted to see a private right of action. The way it’s set up now, the Attorney General should be the originator.”
“The attorney general has a lot of responsibilities; putting it solely on the attorney general to bring cases, especially with a 45-day grace period, is going to be an administrative nightmare,” Slover told Gizmodo. “We just wish there had been a little more attention to detail.”
Slover isn’t the only one concerned about the loophole. Consumer Reports issued a statement last week saying Maryland’s law was not good enough.
“While it’s encouraging to see the Maryland legislature taking up this issue, this bill has flaws that will limit its real-world impact,” Grace Gedde, senior policy analyst at Consumer Reports, said in a statement. “We urge other state legislatures to consider individual pricing legislation to create stronger consumer protections and avoid the loopholes that weaken this bill.”
Maryland Governor Wes Moore still needs to sign the Protection from Predatory Pricing Act into law for it to become law, but he was a vocal supporter of the idea in January.
“Marylandans deserve to know that the price they see on the shelf is the same price they’ll pay at the register,” Gov. Moore said in a statement published online.
“Our administration is focused on protecting Marylanders from skyrocketing costs,” Moore added. “At a time when Marylanders are already burdened by the rising costs of groceries, housing and everyday needs, we must ensure that new technologies are not used to drive up the bill for working families.”
Whether you want to investigate any particular aspect of variable pricing, it is all made much easier to accomplish thanks to artificial intelligence, which can make rapid changes in prices even without direct human intervention.
At least a dozen other states are currently considering banning surveillance pricing, with bills also being considered in the U.S. House and Senate. Federal legislation is unlikely to go anywhere with Democrats in the minority. But that could change after the midterm elections in November.
And while Maryland was the first to take action, it will be interesting to see if other states pass laws to combat the rise in surveillance pricing, as retailers collect massive amounts of data about us and charge wildly different prices for the same goods.
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