Maryland Gov. Wes Moore signed a new bill into law this week designed to protect people in the state from so-called surveillance pricing, a form of dynamic pricing that adjusts how much is charged to a given consumer based on factors such as race, income, and ZIP code, among others.
Maryland’s Protection From Predatory Pricing Act bans food retailers like grocery stores and third-party food delivery services from using personal data to adjust prices. And while many consumer advocates admit it’s at least a step in the right direction, others on the front lines warn it’s not enough.
The bill targets only food retailers, so it doesn’t ban surveillance pricing for other goods and services, like airlines or clothing. And the only one who can enforce the law under its provisions is the Attorney General of the state, who has quite a lot of other things to look after at any given moment.
The United Food and Commercial Workers International Union (UFCW), a labor union of 1.3 million people that includes many grocery store workers, has developed a campaign against surveillance pricing. And UFCW International Vice President Ademola Oyefeso worries that lawmakers in Maryland aimed too low with the law, calling out the loopholes for the use of personal data.
“Stores collect so much information on customer data, whether it’s from their credit card spending, time spent in a store,” Oyefeso told Gizmodo, arguing that stores should be allowed to “use all of these things to determine prices for people.”
One of the big concerns for the UFCW is allowing for changes in prices multiple times a day.
“You shouldn’t be allowed to do that. That’s basically surge pricing,” said Oyefeso. “And Uber does it. We get angry when they do it. Imagine surge pricing on food, on things you need. They charge me more for milk, or it’s going to be sunny tomorrow, they’d start charging me more for ice cream.”
Oyefeso is also worried about electronic shelf labels (ESL), which have become a hot-button issue recently, especially as Walmart has rolled them out with plans to have every store in the country equipped with ESLs by the end of the year. They can allow for instant changes of prices multiple times per day from a centralized location, at least in theory.
Walmart has defended the move as modernization that has to be approved by a human, but the company has won patents for dynamic pricing that have raised plenty of alarm bells. And Oyefeso doesn’t think that having a human in the loop, as it were, is a real safeguard.
The labor union VP compared it to George Jetson from the classic TV show. “The Jetsons was a great show when I was a kid. But it’s not the world I want to live in, where the computer tells me what to do. I push a button, and then I’ve just raised the price on milk and eggs for the whole nation,” he said.
UFCW has developed a 30-second ad to talk about the dangers of surveillance pricing, helping people visualize the world as it could be if grocery stores take advantage of the algorithmic possibilities.
The UFCW isn’t the only group concerned that Maryland’s law is weak. Consumer Reports says it voiced serious worries about provisions in the law even before it was signed.
“We appreciate Governor Wes Moore and the Maryland legislature for making the issue of surveillance pricing a top priority during this legislative session,” Grace Gedye, senior policy analyst at Consumer Reports, said in a statement.
“Unfortunately, this law has too many industry-friendly loopholes and weak enforcement provisions,” Gedye continued. “It won’t protect Marylanders from surveillance pricing. 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.”
Other concerns listed by Consumer Reports in a recent press release include:
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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)
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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.
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Exempting any pricing associated with loyalty or membership programs, even if the prices offered through a loyalty program are higher
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Exempting any pricing associated with purchases made on a subscription basis or in association with a subscription service
There are at least a dozen states that are considering bans on surveillance pricing, including New York, New Jersey, and Illinois.
Oyefeso hopes that other states can learn from the failures of Maryland, but he also believes that Maryland can come back later and revise the bill to give it some teeth.
“We know that he wants a good deal,” Oyefeso said of Gov. Moore. “And we know he’ll come back next year and fight for more, but I think the legislature needs to understand that what they did was open Pandora’s box by telling retailers it’s fine to do this. And that’s a problem. So the hope is that these three other states that still have time won’t make the same mistake Maryland did.”
