Key Takeaways
- Surveillance pricing uses personal data to charge individuals different prices for the same product, while dynamic pricing adjusts based on market conditions and applies equally to all shoppers.
- Maryland and Connecticut have enacted surveillance pricing bans, with New York legislation passed and awaiting the governor’s signature.
- Retail experts say the reputational and regulatory risk of surveillance pricing outweighs the margin gains, prompting some retailers to abandon it proactively.
What if the price of a gallon of milk depended not on the product, but on the person buying it? That once-hypothetical question is now at the center of a growing debate over how retailers use consumer data.
Beginning Oct. 1, 2026, Maryland will become the first state to prohibit what lawmakers call “surveillance pricing” for certain grocery products. The law applies to large grocery retailers and delivery platforms while preserving familiar practices like loyalty programs, coupons and personalized discounts.
Building on Maryland’s initial push, Connecticut signed legislation on June 4 targeting data-exploitative price personalization, while the New York legislature followed a day later by passing a ban on surveillance pricing that now awaits the governor’s signature.
The main question these new laws raise: How should retailers use customer data, and where should the line be drawn?
What Is Surveillance Pricing — and How Is It Different from Dynamic Pricing?
To understand why these new surveillance pricing laws matter, it helps to understand what they target and what they do not. Much of the public debate treats dynamic pricing and surveillance pricing as the same thing, but they are fundamentally different practices.
As John Andrews, Alex Lee Professor of Business at Lenoir-Rhyne University, explained in an interview with Retail TouchPoints: “The cleanest way to separate them is dynamic pricing reacts to the market, and surveillance pricing reacts to you.”
The difference sounds subtle but has far-reaching implications.
Andrews founded Collective Bias, a shopper-marketing company later acquired by Inmar, and worked at Walmart, Newell Rubbermaid and Ricoh. His perspective comes not from privacy law, but from firsthand experience building and buying pricing and data systems.
“Dynamic pricing asks what this seat, this hotel room, or this case of water is worth right now — and the answer is the same for everyone standing in the same conditions at the same moment,” Andrews said. “Airline fares, surge pricing and hotel rates are dynamic. Surveillance pricing asks a different question: what is this particular person willing to pay? And then it sets a price that may differ from the one their neighbor sees for the identical item at the identical moment. The inputs are personal — location, device, browsing and purchase history, even how you move your mouse on the page.”
That distinction is why definitions matter. Retailers have relied on dynamic pricing for decades. Consumers may not always love fluctuating airline tickets or surge-priced rides, but most understand the rationale. Market conditions change. Inventory changes. Demand changes.
But surveillance pricing strikes a different nerve because it challenges a basic expectation of fairness.
“Dynamic pricing has been around for decades, and most shoppers grudgingly accept it,” Andrews said. “Surveillance pricing is newer, quieter, and it breaks the basic fairness assumption that the price tag is the price tag.”
Enforcement Questions Cloud the New Laws
Ecommerce and retail adviser Greg Zakowicz said the challenge revolves around enforcement.
“It’s hard to make a sweeping categorization because different state laws target and define pricing models differently,” Zakowicz said in an interview with Retail TouchPoints. “There is news of retailers updating their privacy policies to account for the disclosure of using technology to influence pricing. Some are updating their algorithms to account for allowable factors.”
But he warns that clarity in law does not guarantee clarity in practice, especially once exemptions enter the picture.
“While passing laws curbing these potential abuses is a good thing, enforcement becomes necessary — but do these laws have enough teeth?” Zakowicz said. “What carve-outs are included? One carve-out in the Maryland law mentions prices through loyalty, membership or rewards programs in which a consumer may voluntarily enroll or consent to participate. Would this exempt a grocer from using surveillance pricing for a member of their store loyalty program? If so, this likely includes the majority of its customers.”
Where Do Retailers Stand?
“Retailers largely opposed the law before it passed but, interestingly, did so on the grounds that they already offered uniform prices,” Neil Saunders, Managing Director and Retail Analyst at GlobalData, said in an interview with Retail TouchPoints. “This is largely because surveillance pricing goes down badly with consumers.”
“That said, there is no evidence that surveillance pricing was a widespread practice in Maryland,” he added. “What retailers are doing now is checking things like loyalty mechanisms and reward programs to make sure they do not fall foul of the law. These are common ways of offering deals, but they need to be double-checked to ensure compliance.”
Two Camps: Compliance vs. Retreat
For retailers, Maryland’s law raises both practical and strategic questions, but many continue to view it primarily as a compliance exercise.
“There are two camps,” Andrews said. “The first treats it as a privacy-compliance problem — mapping which data feeds into pricing, adding disclosures where a state like New York now requires them, and building opt-outs.”
Others are taking a more cautious approach by stepping away from individualized pricing altogether.
“The second camp, and the more telling one, is quietly retreating,” Andrews said. “When Consumer Reports showed that Instacart was serving different prices to different shoppers in the same store at the same time, the company pulled the experiment, and two state attorneys general opened investigations.”
“A lot of operators looked at that and ran the math,” he added. “The upside of individualized pricing is a few points of margin. The downside is a trust collapse and a regulator at your door. For any retailer that depends on customers coming back, that is a bad trade. The smart ones are not waiting to be told no.”
