On behalf of our member companies that make NJBIA the largest, most impactful association representing job creators in New Jersey, we strongly encourage the Committee’s consideration of amendments to Assembly Bill A-4085 (Onyema/Quijano/Bagolie) and Assembly Bill A-4523 (Onyema/Sampson).
We appreciate the intent of this legislation to strengthen consumer trust and transparency in the pricing of groceries and food goods. Consumers should have confidence that the prices they see are fair, consistent, and not driven by opaque uses of their personal data.
At the same time, it is critical that any statutory framework carefully distinguish between:
- the use of data to engage in harmful, unfair or discriminatory pricing practices, whether voluntarily offered by or involuntarily collected from consumers;
- the use of data voluntarily offered by consumers to customize their shopping experience and lower costs; and
- the use of technology to communicate prices in a timelier and more efficient manner.
At a time when affordability is of major concern to New Jersey residents, the legislation’s call to make it unlawful to use pricing strategies that are informed by personal data creates a major challenge for grocery and food stores to deliver the meaningful savings consumers need and have come to rely on.
For loyalty programs, which are voluntary, personal data is used to provide consumers with savings opportunities tailored to their shopping experience and ensures the efficient delivery of coupons and other incentives, resulting in better deals for consumers. Additionally, this data is used to determine eligibility, calculate rewards, and process redemptions, as well as to communicate product safety recalls, and prevent fraud, abuse, and misuse. Together, the data helps to ensure continued access to more valuable benefits, while reducing waste and fraud.
In its current form, this bill creates a false choice between consumer protection and operational efficiencies, when both objectives can and should coexist. To better align these two objectives, we recommend amending the bill to:
- Define surveillance pricing as strategies to increase prices above a baseline price using personal data; and
- Assert that the use of surveillance pricing, or any pricing strategy that increases above a baseline price, the sale price of groceries and other foodstuffs based, in whole or in part, on personal data shall be considered an unlawful practice and a violation of the New Jersey Consumer Fraud Act; and
- Establish a cure period for addressing violative actions.
By focusing on the use of personal data to increase prices as the violative action, the legislation will not compromise the use of personal data to inform price decreases, delivered through personalized incentives such as loyalty programs and coupons.
Unfortunately, amendments approved by the Assembly Commerce Committee do not sufficiently address the challenges the bill creates concerning loyalty programs. Section 3(b)(3) outlines the provisions by which a loyalty program would not be considered violative under the proposed law, with four specific conditions. One of these conditions is in subsection (b), which establishes that all members of the loyalty program receive uniform pricing benefits. This provision is problematic, as it misconstrues how coupons operate.
Coupons are part of a marketing strategy, where the cost-savings experienced by consumers are borne by retailers and manufacturers, with the goals of establishing customer loyalty and assessing product marketability. With a business's finite budget line paying for these coupons, offering the coupon must be a strategic effort that can provide a return on investment.
By calling for all members of a loyalty program to receive a pricing benefit uniformly, the bill effectively requires a retailer/manufacturer to offer every coupon to every consumer. Retailers and manufacturers must assume 100% redemption of all coupons and other promotions being offered. This is necessary for budget and accounting purposes, legal compliance, and for accurate real-time reconciliation between retailers and manufacturers. This is counter to the marketing goal of a coupon and will lead to decreased cost savings to consumers, with a reduction in the overall benefit per coupon, if offered at all. Moreover, if this stipulation is required to satisfy the bill’s provisions for offering a different price on groceries and other foodstuffs, retailers and manufacturers will be deterred from offering any coupons or loyalty programs in New Jersey.
Lastly, we recommend the removal of references to electronic shelf labels, which are a useful tool to ensure an accurate and timely display of prices while permitting the deployment of valuable retail personnel to higher priority tasks.
We value the opportunity to discuss these considerations to ensure this legislation strikes the right balance of protecting consumers from harmful practices while allowing grocery and food stores to responsibly leverage technology to improve efficiency, transparency, and affordability.
Thank you for your consideration of our position. Should you have any questions, please contact me at aford@njbia.org.
