Opponents of a new bill proposed by Democratic lawmakers are voicing concerns that it could exacerbate challenges for Californians already facing high living costs by removing grocery discounts.
Retailers, including grocery chains, have intensified their opposition, launching a campaign to thwart the bill, known as AB 2564. This legislation seeks to essentially eliminate what is termed supervised pricing, which involves using personal data to set different prices for consumers.
Information gathered from various sources, like apps and browsing habits, can influence pricing algorithms that take into account a shopper’s income and purchasing patterns.
This marks at least the second attempt by Rep. Chris Ward to regulate this practice, following last year’s similar proposal which he withdrew. However, this year he’s seen gains in support as affordability continues to concern voters nationwide.
Proponents of the bill argue that prohibiting this pricing strategy would protect consumers from unfair charges.
“No one wants to face inflated fees based on personal data,” said Ward earlier this year. He emphasized that this practice often impacts low-income consumers and those with limited shopping alternatives the most.
However, grocery store representatives argue that the proposed restrictions could negatively impact savings and options for consumers. Loyalty programs and discounts often rely on data collection similar to what’s being targeted by the bill.
“Families are already stretching their budgets thin,” remarked Rachel Michelin, president of the California Retailers Association, warning that the bill could worsen the situation. She argues that shoppers currently depend on weekly offers and loyalty incentives to help manage rising prices. “This is a solution looking for a problem and runs counter to the goal of improving affordability,” she added.
The legislation allows for certain exceptions, permitting discounts that are publicly accessible. Nonetheless, if these discounts utilize digital data, they must be grounded in “open standards” achievable by anyone, such as signing up for a newsletter, and have to be available to broad groups rather than targeting individuals.
Critics contend that these provisions could dissuade grocery stores from offering personalized discounts altogether. A coalition opposing the bill, calling itself Californians for Consumer Affordability, argues that AB 2564 introduces a complex legal framework that may significantly burden businesses, particularly smaller ones, leading them to reconsider their discount strategies.
Ward has mentioned during a congressional hearing that he’s still contemplating the implications of the bill, aiming to preserve discount programs. The deadline for the bill to be sent to the governor is approaching at the end of August.
Consumer advocacy groups, like Consumer Reports, support transparency mandates, voicing concerns that discounts may inadvertently lead to personalized pricing models. “We want to ensure the language in the bill avoids creating any sort of loophole allowing this,” Ward stated, expressing a desire to avoid unintended consequences.
