Top Maryland Democrats signaled last month that banning surveillance and dynamic pricing statewide would be a high priority this legislative session, and one of the bills to begin work on the matter had its first committee hearing Tuesday.
HB0148 would prohibit the use of personal or biometric data when companies set their prices.
The practice — known as surveillance pricing — is used to set customized prices for individuals based on data collected around their traits and characteristics, often through artificial intelligence (AI).
Del. Joe Vogel (D-Montgomery County) brought the bill forward out of concern that companies are using surveillance pricing to selectively price gouge customers based on their spending habits.
“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,” Vogel said during his opening remarks.
Vogel noted Instacart — a third party grocery delivery service — stopped the practice after amid outrage from customers in December, but he worries surveillance pricing tactics will only spread if not regulated.
“There is discussion of a number of additional businesses that are looking to engage in AI price gouging and wage fixing,” Vogel said, also referring to workers being docked pay based on surveillance data, like tracking driving habits and workplace efficiency metrics.
An amendment to the bill — that would need lawmaker approval — is proposing banning electronic shelving labels (ESLs) altogether, which are digital price tags in stores that allow companies to adjust prices without manually changing tags.
“ESLs allow a company to change prices instantly, several times a day for different customers. Without this prohibition, companies will continue to implement surveillance based pricing at scale,” said Elizabeth Bobo, legislative director at the Maryland State and DC AFL-CIO.
Retail and tech advocates testified in strong opposition to the bill as written, arguing banning any type of data-driven customized pricing could result in less discounts for customers.
“Retailers strongly support the principle that consumer data should not be used to increase prices, and if that's what this bill said, I'm pretty sure I wouldn't be sitting up here. We agree with that goal full stop,” said President of the Maryland Retailers Alliance Cailey Locklair.
Locklair argues Maryland’s data privacy laws allow businesses to collect consumer data, as long as that practice is disclosed and customers are allowed to opt out.
“But consumer and retail loyalty programs are different because they're more protective. They are opt-in. Consumers choose them because they want savings. Retailers use data to deliver data-driven discounts, not penalties,” Locklair said.
“The bill would ban personalized coupons. You regularly buy the same brand of chips at the grocery store, so the store sends you a coupon for that brand. It would ban loyalty rewards. You buy five coffees from a local shop. Your sixth is free,” said Brianna January with the Chamber of Progress, who also testified against the legislation.
Locklair also refutes that ESLs do more harm than good, explaining they help with workplace efficiency so employees don’t have to manually change price tags.
The bill is in its initial phase of the legislative process, meaning it could be further amended to address these concerns if lawmakers so choose.
Similar bills are still on the way for consideration — the highest profile data pricing bill is HB0985, which received a triple endorsement from Gov. Wes Moore, House Speaker Joseline Peña-Melnyk (D-Anne Arundel and Prince George’s Counties) and Senate President Bill Ferguson (D-Baltimore City) last month.
The legislation would ban grocery stores from utilizing dynamic pricing or consumer surveillance data to set food prices.
While sometimes used interchangeably, dynamic pricing often refers to companies raising prices at peak demand times for all customers, while surveillance pricing refers to price setting based on personalized data.
Both the governor and Vogel have said there are examples of data-driven price setting in brick and mortar stores, but they did not cite any specific cases happening in Maryland.
In the same vein, HB0434 is poised for a committee hearing next week, which would prohibit landlords from using algorithmic devices to determine the amount of rent to charge a tenant.
