In testimony before the Assembly Consumer Affairs Committee on Thursday, NJBIA recommended amendments to the proposed “Fair Price Protection Act” that would strike a better balance between consumer protection and legitimate business operations.
The legislation before the committee, an Assembly committee substitute for A-4085/A-4523, would outlaw so-called “surveillance pricing,” a data-driven practice by which a company can set different prices for groceries or other products based on what it has gleaned from an individual shopper’s personal data, such as income, location, or online browsing habits.
“Consumers should have confidence that prices they see are fair, consistent and not driven by opaque uses of their personal data,” said NJBIA Vice President of Government Affairs Althea D. Ford. “At the same time, it is critical that any statutory framework carefully distinguish between harmful pricing practices and legitimate longstanding business operations.”
Ford offered the committee a series of amendments, including requiring merchants to set a baseline price for products and then prohibiting the use of personalized algorithmic pricing to nefariously raise the price above that baseline for any shopper.
Specifically, the bill’s definition of “personalized algorithmic pricing” should be modified to only prohibit individualized prices that exceed the baseline, Ford said. Loyalty discount programs and promotional offers that lower prices for consumers should be excluded.
Ford also addressed a provision in the bill restricting the use of personal data. Some data collected may be useful for other important consumer communications unrelated to pricing, such as notifying consumers about recalls, she said.
“Some other items we encourage is explicitly protecting membership-based pricing programs and personalized offers based on purchase history, adding an exemption for differential pricing based on time of day, seasonality, inventory levels, perishability and other legitimate business factors applied uniformly, and expanding the bona fide discount exemptions to include loyalty programs with points or credit systems,” Ford said.
Additionally, NJBIA recommended that provisions related to electronic shelf labeling (ESL) be revised to focus on prohibited conduct, rather than banning the technology itself, Ford said. ESL refers to small digital screens placed on retail shelves that wirelessly display product pricing and information instead of paper tags that take longer to update and increase labor costs.
“We support the goal of protecting consumers from unfair or discriminatory pricing, but we also need to maintain the flexibility of businesses to operate efficiently,” Ford said.
The Assembly Consumer Affairs Committee voted to advance the legislation, sponsored by Assemblyman Chigozie Onyema (D-28), to the Assembly Commerce & Economic Development Committee for further review.
