Recently, the popular retail and grocery delivery app company, Instacart, faced backlash after a report revealed it was secretly using consumer data to charge some customers more than others for the same items, prompting a change in policy. 

Now, state Attorney General Letitia James and top Democratic lawmakers want to take on those companies using algorithms and personal data to set individualized prices for groceries, medicine and diapers, and ban a practice known as “surveillance pricing.”

“The latest example of exploitation,” James said during a press conference in Albany on Monday.

What You Need To Know

Last year, a report found that people shopping on separate Instacart accounts might pay different prices for the same items

Using personal data like browsing history, location or salary, Instacart charged individualized prices for items unbeknownst to customers, according to an investigation by several nonprofit groups

The probe prompted an apology and rollback of the policy from Instacart. But now, state Attorney General Letitia James and top New York lawmakers want to ban the practice through a package of proposed bills

Last year, a bombshell report found that people shopping on separate Instacart accounts might pay different prices for the same items.

Using personal data like browsing history, location or salary, Instacart charged individualized prices for items unbeknownst to customers, according to an investigation by several nonprofit groups.

“Instacart’s pricing experiments resulted in some shoppers being charged up to 23% more for grocery items for the exact same item from the exact same store at the exact same time. For a family of four, that could mean paying more than $1,200 a year just to be a lab rat for Instacart,” Elizabeth Pancotti of Groundwork Collective said about one nonprofit that worked on the report. 

The probe prompted an apology and rollback of the policy from Instacart. 

But now, James and top New York lawmakers want to ban the practice through a package of proposed bills. 

“How much do you might pay for a subscription to a streaming service or to a magazine? How much might you pay for any product you buy online? All of this consumer data that is very particular to you, they’re using to figure out how high a price they can charge you,” state Senate Deputy Majority Leader, a Queens Democrat, said. 

It’s called “surveillance pricing,” which is defined as when companies set prices based on personal data, James’ office said. It’s different from “dynamic pricing” recognized as surge pricing practices used by Uber, which likely wouldn’t be covered under the proposed legislation, according to James’ office.

“I call it predatory pricing. And it is time for us to take action against this dishonest practice, as New Yorkers continue to endure an affordability crisis,” said James.

One bill bars the algorithms and requires a disclosure detailing how prices are set.

The other says brick-and-mortar stores can’t use digital price tags able to change from the time a shopper takes an item off the shelf to when they pay at the register. 

“Walmart announced earlier this month that it’s expanding digital price tags to all of its U.S. stores this year. These electronic shelf labels allow retail giants to change the price of groceries in the blink of an eye,” Pancotti said.

But opponents say New Yorkers would suffer instead from a lack of “smart” pricing deals.

“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,” a tech policy group Chamber of Progress wrote in a statement, adding: “proposals like this threaten the very tools like targeted coupons and loyalty rewards that help families afford groceries and other basics.”

“Provide discounts for frequent purchase, and things of that nature, that would be permitted but the moment they’re looking at your personal data to figure out how high a price they can charge you relative to everybody else who might be shopping there, that’s when it becomes a problem,” Gianaris added. 

Labor unions are also on board, making the case that it protects grocery store workers’ jobs.