Critics take aim at companies that charge different prices based on personal data

ALBANY — The next time you buy an item online, you might want to ask a friend if they’re getting the same price.

Democrats in the state Legislature are pushing two bills to ban surveillance pricing, by which companies offer a customized price to a shopper based on personal data they’ve collected.

The people most susceptible to being taken advantage of through surveillance or algorithmic pricing are those who rely on online shopping to get food and goods, said Kristen McManus, the director of government affairs and advocacy with AARP New York. That includes people in rural areas, or people without access to reliable transportation or with mobility challenges.

"We have an old, familiar term for this and it’s called getting ripped off," McManus said during a rally at the state Capitol earlier this week.

Last January, the Federal Trade Commission published a report on how companies can use such information as a person’s location or browsing history to target individual consumers with different prices for the same goods and services.

The commission found a number of consumer behaviors, such as mouse movements on a webpage, the type of unpurchased products left in an online shopping cart and others, are tracked and used to tailor product prices.

Assemb. Emérita Torres, D-Bronx, who is sponsoring one of the bills, said technology in most cases is supposed to improve outcomes for consumers. But this is a case where it can lead to exploitation, she said, adding that she had noted instances of surveillance pricing herself.

"I buy diapers, my partner buys diapers, and we get different prices for the diaper that we buy," she said.

Torres’ bill would ban retailers from setting individualized prices for goods or services based off algorithmic pricing. It would also require retailers that use an automated pricing system to publicize the data it relies on to set those prices.

Industry opposition

The Chamber of Progress, a technology industry coalition, is opposing Torres’ bill, arguing that retailers rely on practices like surveillance pricing to provide consumers with targeted discounts.

Chamber of Progress Policy Manager Drew Ambrogi said the legislature’s proposals would only drive up costs for families.

"New Yorkers are rightfully fed up with high prices for everyday essentials, but this bill pins the blame on the wrong cause and would make the cost of living worse," he said in a statement.

Torres’ bill includes carve-outs for subscription-based discounts, uniform promotions, loyalty programs, prices authorized by law and bona fide group-based discounts.

State legislators have attempted to tackle the issue before.

Last year, the state passed the Algorithmic Pricing Disclosure Act, which requires companies to disclose their use of consumer characteristics to determine prices.

Attorney General Letitia James urged residents to report suspected cases of surveillance pricing late last year. James’ office did not have data on how many complaints it had received.

Personal data

James lent her support to the new bills seeking to ban the practice, saying they offered practical solutions, including stronger transparency requirements and limits on how companies can use shoppers’ personal data to set prices while still allowing them to offer discounts customers rely on.

Assemb. Michaelle Solages, D-Elmont, said surveillance pricing was just a digital coat of paint over what amounts to price-gouging. Solages is sponsoring the second bill, which would prohibit food and drug stores from using customer data to set personalized prices.

It would also ban electronic shelf labels that allow real-time pricing at those stores and the use of protected class data or data collected from minors to set prices.

Walmart announced earlier this month that digital price tags are expanding to all of its stores in the United States.

"We want to protect people's budgets from surge pricing on milk and bread and medication, and also protect jobs," Solages said. "Consumers may not even realize that their browsing history, their vacation and their purchasing patterns are being used to determine how much more they might be asked to pay."

A study last year by the progressive advocacy group Groundwork Collaborative found that online shopping retailer Instacart was offering customers different prices for groceries that resulted in some shoppers being charged up to 23% more than others.

Instacart denied it was using surveillance pricing but ended the program, according to The Associated Press.

"Advances in artificial intelligence are allowing corporations to charge you a different price than your neighbor or the person sitting next to you on the train," said Elizabeth Pancotti, the managing director of policy and advocacy at Groundwork Collaborative.