New Jersey bans AI-backed pricing that could charge shoppers more for the same item

New Jersey is taking aim at a pricing practice that could make groceries and other everyday essentials more expensive for some shoppers based on what an algorithm decides they can afford.

Governor Mikie Sherrill signed a new law designed to stop businesses from using personal data to quietly charge different customers different prices for the exact same item, according to ROI-NJ.

What happened?

After winning final passage in both legislative chambers on June 30, the Fair Price Protection Act was signed by Sherrill on July 23 during an event held in a Newark grocery store.

Under the law, stores may not set individualized prices for groceries and other essential items by mining personal information such as browsing behavior, location data, or past purchases. 

In other words, retailers cannot rely on surveillance-style tracking or AI-driven judgments about a shopper's willingness to pay to charge more.

"This law puts New Jersey shoppers first by protecting their privacy and ensuring fairness in pricing," Sherrill said, per the publication.

The legislation's sponsors were state Senators Joe Cryan and Joe Lagana, along with Assembly members Rosaura Bagolie, Annette Quijano, and Chigozie Onyema.

By enacting the measure, New Jersey joins Maryland and Connecticut, making it the third state with a restriction of this kind on grocery pricing, widely called "surveillance pricing." 

Similar bills are under consideration in California, New York, Massachusetts, and Illinois.

Why does it matter?

Two people could walk into the same store — or shop online for the same product — and see different prices.

In this respect, however, the price they pay is based not on supply and demand, but on how much a company believes each person is willing to spend.

Supporters of the law say that kind of pricing could place the heaviest burden on households already struggling to afford basic goods. 

Per ROI-NJ, Damon King, senior counsel in the Economic Justice Program at the New Jersey Institute for Social Justice, warned that "surveillance pricing has the potential to exacerbate economic strain — especially for low-income and communities of color who are already struggling more than others and are less able to adjust to price increases."

Critics of surveillance pricing say the practice also raises privacy concerns because it depends on companies collecting and analyzing more data about shoppers' habits, movements, and spending patterns.

However, Michele Siekerka, who heads the New Jersey Business and Industry Association, suggested that this could be detrimental to shoppers, putting coupons, loyalty programs, and customer-specific discounts at risk. 

"This law will compromise the very cost-saving programs that consumers rely on, particularly during an affordability crisis," Siekerka said.

What's being done about surveillance pricing?

Contrary to Siekerka's claim, loyalty programs and discounts are still allowed under the measure. 

The focus is on preventing essential-goods pricing from being tailored through the use of personal data, rather than stopping savings offers that are broadly available to shoppers.

Existing electronic shelf labels can remain in place, and stores may repair or replace them, but the law halts any new installations for one year while the New Jersey Innovation Authority studies the technology's impact.

The measure follows Sherrill's other recent actions on so-called junk fees and algorithmic rent-setting.

"If businesses want to compete, they should do so by offering better prices, not by finding new ways to squeeze shoppers," Sherrill remarked. 

"The Fair Price Protection Act restores a basic principle of consumer fairness," said Dena Mottola Jaborska, executive director of New Jersey Citizen Action.

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