Maryland has become the first state in the nation to outlaw a controversial practice that consumer advocates have warned about for years: using a shopper’s personal data to charge that specific person more for groceries. The law takes direct aim at what critics call “surveillance pricing.”

The measure is now on the books. On April 28, Governor Wes Moore signed House Bill 895, the Protection From Predatory Pricing Act, which restricts personalized, data-driven, and AI-enabled pricing in the food sector. It makes Maryland the first state to prohibit grocery retailers and delivery providers from using personal consumer data to set individualized food prices. The law takes effect October 1.

The legislation draws a careful line. It does not ban all dynamic pricing. Instead, it targets the narrower and more controversial practice of using artificial intelligence and consumer profiling to determine how much a specific shopper might be willing to pay. The law applies to food retailers with locations of 15,000 square feet or larger that maintain substantial grocery operations, as well as third-party delivery services.

Enforcement carries significant penalties. The Maryland Attorney General will oversee enforcement, with a 45-day cure period and civil fines of up to $10,000 per violation, rising to $25,000 for repeat offenses. The measure does not create a private right of action.

Importantly, the law still allows retailers to offer discounted prices to consumers who voluntarily agree to share personal data in exchange for those discounts, preserving traditional loyalty-program pricing models.

The retail industry argues the legislation addresses a problem that has not been proven to exist. The Maryland Retailers Alliance called the law unnecessary, arguing that existing consumer-protection statutes already prohibit misleading or discriminatory pricing and noting that the Attorney General has not documented substantiated complaints involving grocery surveillance pricing.

Consumer advocates strongly disagree. The Electronic Privacy Information Center (EPIC) called the ban “essential,” arguing that surveillance pricing is inherently difficult for consumers to detect and avoid because shoppers often have no visibility into how pricing algorithms operate.

Maryland may not remain alone for long.

Several states, including California, Colorado, Illinois, Massachusetts, New York, and New Jersey, are considering legislation addressing algorithmic pricing, AI transparency, or surveillance-pricing practices. New York has already enacted an Algorithmic Pricing Disclosure Act, requiring retailers that use personal data in pricing decisions to notify consumers that an algorithm helped determine the price.

The business implications extend far beyond Maryland.

For national grocery chains and delivery platforms, the growing patchwork of state laws is becoming a compliance challenge. Terms such as “dynamic pricing,” “algorithmic pricing,” and “surveillance pricing” are often used interchangeably in public debates, even though they describe different practices and may be regulated differently from state to state.

Companies now have until October 1 to review how customer information influences pricing decisions. Legal experts say the food sector may be only the beginning. Similar questions are already being raised about personalized pricing in airlines, retail, travel, insurance, and financial services.

Maryland’s law may represent the first major attempt to draw boundaries around AI-driven pricing. Whether other states follow could determine how much companies are allowed to know about consumers before deciding what price each customer sees.

JBizNews Desk — Retail & Consumer Affairs

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