Maryland Passes First Law in U.S. Banning Personalized Pricing in Grocery Stores
Consumer advocates say the first-in-the-nation ban includes industry-friendly exemptions that could blunt its impact on grocery prices
Maryland today became the first state in the U.S. to ban personalized pricing at grocery stores. But consumer advocates say the law, signed by Gov. Wes Moore, is full of industry-favored exemptions that dilute the measure and make it unlikely to save Marylanders money on groceries.
Maryland is one of several states where legislation aimed at personalized pricing is moving forward this year. There are similar bills in California, Colorado, Illinois, New Jersey, and New York, among other states.
Moore championed the legislation after a Consumer Reports investigation published in December found that the grocery delivery app Instacart was setting different prices for the same products from the same stores at the same time. The investigation found the practice was affecting Instacart customers shopping for popular items like Oscar Mayer turkey and Skippy peanut butter at some of the nation’s biggest grocery chains, including Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market, and Target. Prices for some products differed among shoppers by up to 23 percent.
“Imagine you’re a company and you want to offer a price just to men over 40 who love to shop on Fridays and are willing to pay more for cereal. That’s a segment. The way this bill is written and defined, it only addresses prices that are ‘personalized,’ and truly for one person, not the more common segmentation issue.”
Policy Director of Towards Justice, a Colorado-based consumer advocacy nonprofit group
Among the most problematic exemptions, according to consumer advocates, is that the law allows personalized pricing when a customer consents to it, such as when someone signs a lengthy terms of service agreement while shopping online or on a mobile device. Consumer surveys have repeatedly shown that a vast majority of people rarely read business terms and consent forms before agreeing to them.
The legislation also allows companies to “segment” customers into small groups and target those groups with special prices and discounts. Consumer advocates say that practice, aided by sophisticated technology that uses personal data to identify which products particular customers are likely to pay more for, and when, isn’t meaningfully different from personalized pricing.
“Imagine you’re a company and you want to offer a price just to men over 40 who love to shop on Fridays and are willing to pay more for cereal. That’s a segment,” says Nina DiSalvo, policy director of Towards Justice, a Colorado-based nonprofit that urged Gov. Moore to veto the bill. “The way this bill is written and defined, it only addresses prices that are ‘personalized,’ and truly for one person, not the more common segmentation issue.”
State Sen. Clarence K. Lam, a Democrat who represents parts of Howard and Anne Arundel counties, says he was left out of final negotiations over the bill and that the enacted law is an “amalgamation of compromises” and not “as strong and robust” as it could have been.
“Some of these exemptions are pretty big,” says Lam, who ultimately voted for the bill. “Will this clamp down on predatory pricing? Probably not.”
Moore’s office didn’t directly respond to CR’s requests to comment about the criticism of the new law, and referred to the governor’s public statements.
Some critics are optimistic that Maryland’s personalized pricing ban will ultimately be strengthened in future legislative sessions. Mike Houston, general manager of the nearly 10,000-member Takoma Park Silver Spring food co-operative in Maryland, says the law’s ambiguous wording makes it easy for retailers and food companies to continue personalizing prices.
Still, Houston says, the law represents “a marker in the sand that, hopefully, can be improved upon.”
