The Senate Commerce Committee approved legislation that would bar supermarkets from using algorithms to adjust the prices paid by individual shoppers, over the complaints of industry representatives who said the bill could inadvertently block coupons and other discounts.
The measure advanced Monday is a limited bid to block a practice known as surveillance pricing, which sees individual shoppers pay different prices for the same product off the same shelf at the same time. Gov. Mikie Sherrill last week took aim at the practice, pledging to ban it as part of her affordability agenda.
Surveillance pricing drew attention last year after an investigation by Consumer Reports found that grocery delivery service Instacart used an algorithm to charge separate customers different prices for identical products from the same store based on analysis of their personal information.
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In other settings, the practice can involve charging higher prices to customers who repeatedly search for a product. New Jersey lawmakers said they worry surveillance pricing could soon extend to the state’s grocery shelves.
“If you looked at that tomato twice in the past two days, you’re not going to pay any more for it,” legislative sponsor Sen. Joe Cryan (D-Union) said about the bill’s intent.
An earlier version of one of the two bills that merged into the legislation advanced Monday would have broadly barred individualized pricing based on personal data. Cryan said he still wants to prohibit surveillance pricing across industries, not just at grocery stores.
So far, surveillance pricing has largely been limited to online spaces where prices are more easily changed and where retailers can more easily connect a customer to their personal information, but lawmakers said they worry the practice could extend into brick-and-mortar stores through electronic shelf labels.
Cryan said lawmakers were taking proactive action “so that the consumers of the state of New Jersey don’t get screwed over by AI online technology.” The bill would make surveillance pricing by grocery stores a consumer fraud violation.
Several opponents cautioned that the bill could inadvertently bar loyalty and other discount programs common to grocery stores because those programs lead to separate customers paying different prices for identical products.
“Under this bill, the practice of offering tailored or personalized discounts would be banned entirely or rendered legally risky by the bill’s uncertain definition,” said Drew Ambrogi, policy manager for tech industry association Chamber of Progress. “A grocery outlet may not be able to send a coupon for kids’ cereal to a shopper who regularly buys diapers.”
Discounts to lure back infrequent shoppers would be unfeasible if a store were required to offer them to every shopper, Ambrogi said.
Others said brick-and-mortar grocery stores lack the ability to set prices individually for each customer.
“With our grocers, the retailers and their suppliers set prices weeks in advance, so it’s not something that’s changing based on an algorithm or a trend or anything like that,” said Mary Ellen Peppard, vice president of the New Jersey Food Council, which represents food retailers. “They do not change prices based on surveillance pricing.”
The council’s members use electronic shelf labels in the same way they use traditional paper labels, Peppard said — only to show prices.
Peppard, Ambrogi, and others suggested reorienting the bill to bar individualized price increases, though it’s not clear whether that would prevent stores from implementing surveillance pricing through discounts that disappear for repeated shoppers.
Supporters hailed the bill as a positive step for affordability and privacy.
Beverly Brown Ruggia, financial justice director for New Jersey Citizen Action, said barring surveillance pricing would help shoppers make ends meet amid a souring economy. The data used to set surveillance prices is also not guaranteed to be accurate, she said.
“We know that families in New Jersey are struggling terribly to meet costs, and to think that the prices for something as essential as food could be manipulated, especially based on information that cannot be considered reliable, is of deep concern to us,” she told the panel.
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