NJ Senate panel advances bill targeting surveillance pricing at grocery stores

WHY IT MATTERS

New Jersey is moving to restrict a pricing practice that could significantly affect what consumers pay for groceries. The state’s Senate Commerce Committee advanced legislation that would prohibit supermarkets from charging different customers different prices for identical products using algorithms that analyze personal shopping data. The bill addresses what experts call “surveillance pricing”—a practice that leverages customer information to adjust prices at the individual level. If enacted, the New Jersey measure would establish the state as an early regulatory leader in protecting consumer pricing transparency, particularly as grocery retailers increasingly adopt digital shelf labels and data analytics technology that make dynamic pricing easier to implement in physical stores.

WHAT HAPPENED

The New Jersey Senate Commerce Committee approved the surveillance pricing legislation on Monday, moving it forward despite opposition from grocery industry representatives. The bill would classify surveillance pricing by supermarkets as a consumer fraud violation, creating legal liability for retailers who charge separate customers different prices for the same product from the same shelf at the same time.

The legislation emerged after scrutiny of Instacart’s pricing practices. A Consumer Reports investigation last year revealed that the grocery delivery service used algorithms to charge different customers different prices for identical items based on analysis of their personal information. The finding prompted Governor Mikie Sherrill to pledge action on surveillance pricing as part of her broader affordability agenda, announcing last week her intention to ban the practice statewide.

Two separate bills merged into the legislation the committee advanced. An earlier version would have broadly prohibited individualized pricing based on personal data across all industries. The final bill narrowed its scope to grocery stores, though legislative sponsor Senator Joe Cryan indicated he remains interested in extending protections more broadly.

Industry representatives raised concerns during committee review that the bill could unintentionally restrict loyalty programs and coupon discounts that supermarkets commonly offer to incentivize customer purchases. These programs, by their nature, result in different prices for different customers based on membership or promotional eligibility.

BY THE NUMBERS

The bill targets a practice that has remained largely confined to online retail environments, where prices change dynamically and customer identification is straightforward. However, the emergence of electronic shelf labels—technology that allows real-time price adjustments in physical stores—creates the technical infrastructure for surveillance pricing to expand into brick-and-mortar grocery locations. No specific data on current surveillance pricing prevalence in New Jersey grocery stores is available, as the practice has not been systematically documented in that market segment. The Instacart investigation that prompted the bill was conducted by Consumer Reports, a nonprofit testing organization, rather than through government regulatory analysis.

ZOOM OUT

New Jersey’s regulatory approach reflects growing national concern about algorithmic pricing and its consumer impact. Several states have examined dynamic pricing practices, and some jurisdictions have restricted airline and rental car pricing adjustments. The Federal Trade Commission has signaled increased scrutiny of algorithmic pricing generally, viewing certain implementations as potentially deceptive.

Grocery retail specifically has drawn heightened attention as inflation and cost-of-living concerns dominate consumer and political discourse. Other states are monitoring surveillance pricing developments and may follow New Jersey’s lead if the bill becomes law. The practice represents a broader category of data-driven consumer targeting that regulators are beginning to assess for potential harm, particularly when pricing algorithms can exploit shopping patterns or demographic information to charge customers different amounts for identical goods.

Electronic shelf labels, which enable real-time price adjustment in physical stores, are becoming standard in major supermarket chains, establishing the technical foundation for surveillance pricing expansion regardless of current regulatory action.

WHAT’S NEXT

The bill must advance through additional legislative steps before reaching Governor Sherrill’s desk. The measure will likely proceed to the full Senate for consideration and debate, where lawmakers will address industry concerns about loyalty program restrictions. Senator Cryan has indicated his intention to work toward clarifying the bill’s language to protect legitimate discount programs while blocking surveillance pricing.

If the bill passes the Senate, it would then move to the Assembly for consideration and potential amendment. Governor Sherrill’s stated commitment to banning surveillance pricing suggests executive support, making final passage likely. Implementation would require regulatory guidance from the New Jersey Division of Consumer Affairs regarding which pricing practices constitute illegal surveillance pricing and which constitute permissible discounts.

The bill’s advancement also signals that additional surveillance pricing restrictions may be introduced during this legislative session, potentially expanding beyond grocery retail to other retail sectors, as Cryan has advocated.

Source: New Jersey Monitor