Maryland bans personalized pricing for groceries

Personalized data is used to tailor offers to the individual. This is primarily in the interest of the providers. The US state of Maryland is now trying to put a stop to this with groceries: From October, it will prohibit supermarkets from charging higher prices for tax-free groceries based on the customer's personal data. However, it is doubtful that the new regulation will achieve much, given several loopholes.

First, the restriction of the ban on higher (!) prices is noticeable. This is reminiscent of misleading "was" prices. If pasta costs $9 instead of the usual $3, but personalized discounts are constantly applied, this often has the effect of higher prices. According to the wording of the new law (SB 387 and HB 895), this would still be legal.

Furthermore, the new consumer protection regulations are not supposed to take effect if the customer has consented to the use of their data or if the information used is publicly known. In practice, therefore, little may remain of the ban. Nevertheless, it could prevent a worsening of price discrimination, for example through ever more secret spying.

Also applies to delivery services

In addition, there are exceptions for different prices based on supply and demand, for subscriptions, due to location (e.g., due to higher delivery costs or higher rents), promotional prices, price changes for customer loyalty, when booking a membership or voluntary participation in a loyalty program.

In general, food retailers whose premises are smaller than 15,000 square feet (just under 1,400 square meters) are excluded. It makes no difference whether a business collects the personal data itself or buys it from third parties.

The ban also applies to third parties delivering groceries, regardless of the size of their own business premises. This part is likely due to the "AI-Powered Price Optimization" by US delivery service Instacart. Even for pickup at the store, different customers were shown different prices for the same product at the same time. Shortly before Christmas, Instacart promised to stop AI price manipulation. The Instacart division Eversight likely continues to offer AI price determination as a service.

Prohibition of discrimination

A second clause of Maryland's new law generally prohibits discrimination based on legally recognized criteria such as race, gender, or sexual orientation. This is intended to apply to the pricing and sale of all goods and services, including associated benefits.

A weak point of the entire new law is that those who are overcharged cannot go to court themselves and also have no claim to damages in any other way. Only the responsible authority can penalize violations – and even then, only if it has explicitly warned a food retailer or delivery service and they do not change their practice within 45 days. Only then do penalties of a maximum of US$1,000 for the first offense and at most $5,000 for repeat offenders apply.

Both houses of the Maryland parliament have already agreed on the text of the law. The House of Representatives has already passed it, and the approval of the Senate and Governor Wes Moore is a formality. The new law is an initiative of Moore himself; his Democratic party has a two-thirds majority in both houses.

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