Report from Gothamist
In Brief – The New York state legislature has passed a bill to prohibit most businesses from using consumers’ personal data to set individualized prices, a long-standing practice in ecommerce that critics call “surveillance pricing.” Backers say the legislation will stop discriminatory pricing while still preserving so-called “loyalty” and “rewards” programs” and “just for you” coupons, provided that customers voluntarily enroll for them and discounts are based on someone’s purchase history rather than broader personal data. Business groups and grocery industry representatives oppose the legislation and warn that its ambiguous language could undermine those popular discount programs and force them to be scaled back. The surveillance-pricing bill now awaits action by Governor Kathy Hochul (D) who has until the end of the year to sign or reject the measure.
Context – Progressive tech industry critics have targeted “surveillance” and “algorithmic” pricing for years. Claims that AI will be used to supercharge the long-time ecommerce practice has led to a flood of state legislative proposals. One of the big dividing lines is between bills to prohibit the practice in physical stores and bills that also target online commerce. To be clear, there are no reports of any stores using surveillance, data and AI to apply in-store personalized pricing. It’s simply not a real thing and there are too many barriers to actually doing it to detail here. Nevertheless, attempts to ban in-store personalized pricing, and even electronic shelf price labels themselves, is being pursued by legislators looking for an AI issue. A bill banning electronic shelf labels was also moving in New York but failed to win an Assembly vote. To be clear, some manner of personalized prices has been a feature of online commerce for decades. People sometimes get lower offers, sometimes higher. Shockingly, people only like lower price offers. Earlier this year Maryland enacted a ban on personalized pricing in larger grocery stores but did not apply it broadly online. Connecticut, like the New York legislature, passed legislation broadly restricting pricing practices, online and offline. Colorado’s Governor recently vetoed a broad pricing bill.