Maryland is set to become the first state to ban surveillance pricing as the legislature passed the Protection From Predatory Pricing Act this month. Introduced by Gov. Wes Moore in January, the act aims to prevent grocers and third-party apps like delivery services from using surveillance data and dynamic pricing in Maryland grocery stores. It also imposes steep penalties for businesses caught engaging in these practices, including a first-time fine of up to $10,000.
“Marylanders deserve to know that the price they see on the shelf is the price they will pay at the register,” said Moore in a press release. “At a time when Marylanders are already stretched by the rising cost of groceries, housing, and everyday necessities, we must ensure that new technologies are not used to drive up the bill for working families.”
The act will take effect on October 1 this year. If you’re unfamiliar with the practice of surveillance pricing and how it could be making your groceries more expensive, here’s a breakdown of how it works and how you can prevent it from raising the costs of the goods or services you buy.
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What is surveillance pricing?
Surveillance pricing is the practice in which companies use your personal data to assess how much you would be willing to pay for an item. The data can include your location, browsing history, demographics, searches you make on search engines and more.
The Federal Trade Commission conducted a study into the practice and found that anything from mouse clicks to items you left in a shopping cart to purchase later could influence how much you’ll be charged for these items. Companies will also look at the urgency of what you’re searching for, such as last-minute flights.
Why do companies use this? While increasing revenue is the core focus, they also use this data to respond to supply and demand. Rideshare companies like Uber change pricing as demand ebbs and flows. Further, companies use it for inventory control to ensure goods and services are sold before they lose value. They can also use this data to undercut competitors or price-match with them on items.
(Image credit: FTC)
Are there ways to stop surveillance pricing?
Yes, there are several ways you can prevent paying more for items:
- Delete cookies and cache regularly: This removes the tracking data companies use to determine pricing
- Use a virtual private network (VPN): VPNs mask your location data, which makes it difficult for retailers using dynamic pricing algorithms to raise prices
- Be wary of loyalty programs: These programs are ways retailers access your data to determine your shopping habits. The more data they have on you, the more likely they are to predict what you are going to buy, when and how much you’re willing to spend.
- Shop with different devices: Before buying online, use your mobile phone and your computer, since prices can differ on each.
- Don’t make repeated searches: If you’re looking for a last-minute flight, chances are you’re going to visit airline and travel deal websites to find the best deals. The only problem is that retailers can follow your searches, seeing your urgency and providing prices reflective of this. If you want to compare shops, use different browsers to do so.
What’s next for surveillance pricing bans
Ultimately, Maryland is the first state to try to fight the practice. Did the act go far enough? Consumer Reports doesn’t think so.
In response to the legislation, they said, “While it’s encouraging to see the Maryland legislature take up this issue, this bill has loopholes that will limit its real-world impact. We urge other state legislatures considering personalized pricing legislation to build in stronger consumer protections and avoid loopholes that weakened this bill.”
Some of these loopholes include exempting pricing associated with loyalty programs, and that consumers cannot sue companies engaged in surveillance data. The only person who can sue companies is the Maryland attorney general. Even then, they are required to notify companies and give them 45 days to fix violations. If they comply, no further legal action is required.
At least a dozen states are also considering legislation against dynamic pricing. Pennsylvania recently introduced a bill that would ban retailers from changing prices on essential goods within 24 hours. Other states considering legislation are Arizona, Florida, Hawaii, Oklahoma, Kentucky, Nebraska, Tennessee, Illinois, Vermont, Virginia and Washington. New York passed the Algorithmic Pricing Disclosure Act, requiring businesses to disclose when they use algorithms to set prices.
Overall, your best bet against dynamic pricing is to create layers of protection separating you from their algorithms. Use private browsing as often as you can, don’t use loyalty programs unless it’s necessary and alternate your searches between mobile and computer. Doing these things can help you pay fairer prices.
