Report from the Shelby Report
In Brief – The New Jersey legislature has approved the Fair Price Protection Act and sent it to Governor Mikie Sherrill (D), who has indicated she will sign the measure into law. Once enacted, New Jersey will become the third state to ban pricing groceries using consumers’ personal data. The legislation prohibits grocery stores and third-party delivery platforms from using algorithmic or “surveillance pricing” that adjusts prices using information such as browsing history, real-time location, inferred household size or income. The restrictions apply to both in-store and online grocery sales. The law also puts a one-year moratorium on the adoption of electronic shelf labels in New Jersey stores, which is a priority of grocery store employee unions who believe they reduce work. The bill allows several exceptions to the use of individual data for price-setting, including loyalty programs based on purchase history, discounts uniformly available to defined groups such as veterans or teachers, and pricing differences reflecting legitimate cost variations. Grocery retailers and tech groups opposed the bill, arguing that its broad language could undermine voluntary personalized coupons and loyalty rewards that help consumers save money.
Context – Personalized prices have been a feature of online commerce for decades. People sometimes get lower offers, sometimes higher. Shockingly, people only like lower price offers. Evidence points to grocery pricing flexibility resulting in an even mix of slightly higher and slightly lower prices. Nevertheless, progressive tech industry critics have tried to regulate “surveillance” and “algorithmic” pricing for years. The emergence of AI has given new life to their charges and has led to a flood of state price regulation proposals. To be clear, there are no reports of any stores using shopper surveillance, data and AI to apply in-store personalized pricing. It’s simply not a real thing and there are too many barriers to doing it to detail here. Maryland and Connecticut have enacted laws, and the New York legislature has sent a bill to their governor. Colorado’s Governor recently vetoed a broad price regulation bill that notably extended beyond the grocery industry.