INDIANAPOLIS, Ind. (WOWO) — A growing number of states are moving to restrict a business practice known as “surveillance pricing,” which uses personal information such as browsing history, shopping behavior and other consumer data to determine what individual customers may pay.
Three states — Connecticut, Maryland and New Jersey — have become the first in the country to enact laws aimed at limiting the use of personal data to create individualized prices for goods and services.
The laws take different approaches, but they share a common goal: preventing companies from using private consumer information to charge one shopper more than another for the same product.
According to Stateline, lawmakers in at least 11 states considered similar proposals this year. However, some business groups pushed back, arguing that certain versions of the legislation could be too broad and could interfere with legitimate discounts, loyalty programs and pricing strategies.
Maryland approved the nation’s first surveillance pricing law. The measure applies to grocery stores with at least 15,000 square feet of space and third-party food delivery services. Beginning Oct. 1, covered businesses will generally be prohibited from using personal data to set prices for individual shoppers on most grocery items.
The law does allow certain pricing differences, including loyalty program discounts, subscription pricing and adjustments based on factors such as location, supply costs or business expenses.
Maryland also gives companies 45 days to correct violations before state enforcement action can begin.
New Jersey adopted its own restrictions after Democratic Gov. Mikie Sherrill signed legislation in July. The law prohibits retailers from using personal data to establish individualized grocery prices and places a one-year pause on installing new electronic shelf labels while officials examine their impact.
Retailers that already use electronic shelf labels are allowed to continue operating and maintaining them.
“New Jersey families are already feeling the pressure of higher costs,” Sherrill said in a statement. “The last thing they need is companies secretly using their personal data to charge them more than someone else for the exact same product.”
Connecticut’s law, signed by Democratic Gov. Ned Lamont in June, takes a broader approach by restricting surveillance pricing by retailers and third-party delivery companies.
The Connecticut law includes exceptions for certain discounts and pricing differences that are not based on a customer’s personal information.
Consumer advocates say the practice can be difficult for shoppers to recognize because customers typically do not know whether another person received a different price for the same item.
Supporters of the restrictions argue consumers should have greater transparency and protection when companies use large amounts of personal data to influence purchasing decisions.
Business and technology groups, however, say lawmakers need to be careful not to limit common practices such as reward programs, targeted discounts and flexible pricing models that do not unfairly discriminate among customers.
The debate comes as retailers increasingly rely on digital tools, artificial intelligence and consumer data analytics to understand buying habits and manage pricing strategies.
More states are expected to consider similar proposals as lawmakers weigh consumer privacy concerns against the potential benefits and challenges of data-driven commerce.
