Gov. Wes Moore (D-MD) is signing into law a measure advocates believe is needed to prevent price gouging and primarily targets grocery stores in Maryland.
Moore introduced the Protection From Predatory Pricing Act in January, and Maryland lawmakers passed the bill earlier this month. When signed into law, the measure will prohibit certain companies from using both surveillance and dynamic pricing, a novel technology that is becoming an increasingly popular practice for retailers.
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Surveillance pricing can use artificial intelligence and algorithms to sift through consumers’ personal data, such as browsing history or purchasing behavior, to tailor prices to individual customers in real time. Dynamic pricing is broader, allowing retailers to update prices for all shoppers in real time in response to supply and demand, competitor pricing, and inventory levels. All surveillance pricing is a type of dynamic pricing, but not all dynamic pricing is surveillance pricing.
The Maryland measure places restrictions on food retailers, primarily grocery stores, and third-party delivery services from using surveillance pricing. It also restricts dynamic pricing, requiring grocery stores to keep their prices the same for at least one business day. Once Moore gives it his signature, as he recently promised to do, the law will go into effect Oct. 1, with businesses facing fines of up to $10,000 for their first violation.
Advocates believe the law is necessary to protect consumers, and say the bill’s final form did not go far enough, as it did not include a full ban on electronic shelf labels, among other measures. ESLs allow companies to use digital price tags and update prices in real time.
“There was an investigation into Instacart recently that found they were actually grouping consumers into different buckets depending on different characteristics of personal data, and then charging them different prices depending on their personal characteristics,” Democratic delegate Joe Vogel said during a February hearing. “There is discussion of a number of additional businesses that are looking to engage in AI price gouging.”
“Marylanders deserve to know that the price they see on the shelf is the price they will pay at the register,” Moore said in January. “We must ensure that new technologies are not used to drive up the bill for working families.”
Critics have argued that the bill addresses a problem that doesn’t exist. The Maryland Retailers Alliance said earlier this year that Moore and his cohorts have painted a false reality of pricing in Maryland, and noted that dynamic or algorithmic pricing is not the same as surveillance pricing.
“Grocery shelf prices are the same for every customer who walks through the door, regardless of who they are, where they live, or what they have purchased in the past. Claims suggesting otherwise are simply inaccurate,” the group said.
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“Much of the confusion stems from a misunderstanding of dynamic or algorithmic pricing, which retailers use to manage inventory, respond to wholesale cost changes, and remain competitive,” it continued. “This technology helps retailers adjust prices uniformly across all shoppers based on factors such as supplier costs, seasonality, promotions, and market competition—not personal consumer data.”
President of the Maryland Retailers Alliance, Cailey Locklair, added that retailers used data to “deliver data-driven discounts, not penalties.”
