A4742

An Act concerning certain algorithmic pricing strategies, and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “Fair Pricing and Transparency Act.”

2. As used in this act:

“Algorithm” means a computational process that uses a set of rules to define a sequence of operations including, but not limited to, artificial intelligence systems and facial recognition software.

“Behavior” means a consumer’s observable, measurable, or inferred actions, habits, preferences, interests, or vulnerabilities, including the consumer’s: political, personal, or professional affiliations; web browsing history; Internet protocol addresses used; locations frequented; purchase history; financial circumstances; or inferences associated with a group, band, class, or tier of consumers in which the consumer belongs.

“Consumer” means a person who is a resident of this State acting only in an individual or household context, however identified, including by any unique identifier. A consumer whose location is in this State shall be presumed to be a New Jersey resident.

“Dynamic pricing” means modifying the price of groceries and other foodstuffs based on real-time or predicted demand, consumer behavior, consumer characteristics, or algorithmic determination of willingness to pay, rather than changes in the person's actual costs of providing the groceries and other foodstuffs.

“Electronic shelf label system” means any hardware, software, or connected technology used to display or update prices electronically, including electronic shelf labels, pricing servers, wireless beacons, and consumer-facing applications, that have the capacity, directly or indirectly, to collect, receive, infer, analyze, or use consumer data for the purpose of modifying, personalizing, or varying the price of groceries and other foodstuffs. An electronic shelf label system, regardless of whether it is enabled, disabled, or actively utilized, shall be considered an electronic shelf label system for the purposes of this act.

“Groceries and other foodstuffs” means dairy products, meat and delicatessen products, produce products, seafood products, carbonated beverages, coffee and other beverages, snack foods, candy products, baked products, paper products, household cleaning items, health and beauty products, frozen foods, pet foods and supplies, and any other edible product not previously listed.

"Inferred data" means data, assumptions, predictions, or classifications about a consumer that are derived, in whole or in part, from personally identifiable information, device identifiers, online activity, loyalty program participation, or other behavioral information including, but not limited to, inferences about income, education level, household composition, likelihood to purchase certain products, race, ethnicity, age, disability status, or any other protected characteristic.

"Personalized pricing" means pricing that is determined or modified, in whole or in part, through the use of an automated system, artificial intelligence, a machine learning model, or an algorithm that relies on consumer data or inferred data to determine the price a consumer or group of consumers will be charged.

“Personally identifiable information” means information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household. Personally identifiable information shall include, but is not limited to, the following if it identifies, relates to, describes, is reasonably capable of being associated with, or could be reasonably linked, directly or indirectly, with a particular consumer or household:

(1) identifiers such as a real name, alias, postal address, unique personal identifier, online identifier, Internet protocol address, email address, account name, social security number, driver's license number, passport number, or other similar identifiers;

(2) any information that identifies, relates to, describes, or is capable of being associated with, a particular consumer including, but not limited to, a consumer’s name, signature, social security number, physical characteristics or description, address, telephone number, passport number, driver's license or state identification card number, insurance policy number, education, employment, employment history, bank account number, credit or debit card number, or any other financial, medical, or health insurance information;

(3) information that identifies a characteristic that is legally protected from discrimination under the laws of this State or under federal law including, but not limited to, ethnicity, national origin, age, disability, predisposing genetic characteristic, sex, sexual orientation, gender identity and expression, pregnancy-related conditions, marital status, familial status, religion, and reproductive health care;

(4) commercial information, including records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies;

(5) biometric information;

(6) Internet or other electronic network activity information including, but not limited to, browsing history, search history, and information regarding a consumer's interaction with an Internet website application, or advertisement;

(7) geolocation data;

(8) professional or employment-related information;

(9) information that is not publicly available pertaining to a person’s education; and

(10) inferences drawn from any of the information identified in this paragraph to create a profile about a consumer reflecting the consumer's preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes.

“Retail food store” means any retail establishment where groceries and other foodstuffs are regularly and customarily sold in a bona fide manner for off-premises consumption. A retail food store shall not include any retail establishment that has more than 50 employees.

"Surveillance-based price discrimination" means the practice of setting, altering, or manipulating the price of groceries and other foodstuffs offered to a consumer based in whole or in part on monitoring, tracking, or automated analysis of the consumer's behavior, location, demographic characteristics, biometric data, or other personally identifiable information, rather than on the actual cost of providing the groceries and other foodstuffs.

3. a. A retail food store shall clearly and conspicuously post the sale price of groceries and other foodstuffs.

b. A retail food store shall not:

(1) use surveillance-based price discrimination to modify the sale price of groceries and other foodstuffs sold to consumers;

(2) use dynamic pricing to modify the sale price of groceries and other foodstuffs regardless of the frequency or duration of the price change, including price changes that occur within minutes, hours, days, or across separate transactions;

(3) use personalized pricing to modify the sale price of groceries and other foodstuffs based on a consumer’s behavior, inferred data, or personally identifiable information; or

(4) install, operate, or use an electronic shelf label system in retail locations that are 15,000 square feet or larger until four years after the effective date of this act.

c. For purposes of this section, surveillance-based price discrimination, dynamic pricing, and personalized pricing shall not include a reduction in the posted sale price that is uniformly offered or made available to all consumers who meet the disclosed eligibility criteria.

d. A retail food store may offer a loyalty, membership, or reward program if any personally identifiable information collected for the purpose of administering the program is not used to personalize, optimize, or otherwise modify the sale price of groceries and other foodstuffs offered for sale to a consumer.

e. It shall be an unlawful practice and a violation of P.L.1960, c.39 (C.56:8-1 et seq.) for a retail food store to violate the provisions of this section.

4. No later than 12 months after the effective date of this act, the Division of Consumer Affairs shall conduct a study on the use of electronic shelf label systems, as defined in section 2 of this act, and the impact of these systems on pricing transparency and employee job security. The division shall submit a report of its findings and recommendations to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1).

5. The Director of the Division of Consumer Affairs shall, pursuant to the provisions of the “Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), promulgate rules and regulations necessary to effectuate the provisions of this act.

6. This act shall take effect on the first day of the seventh month next following the date of enactment, except that the Director of the Division of Consumer Affairs may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes the “Fair Pricing and Transparency Act.”

Under the bill, a retail food store is required to clearly and conspicuously post the sale price of groceries and other foodstuffs. The provisions of this bill prohibit retail food stores from using surveillance-based price discrimination, dynamic pricing, or personalized pricing to modify the sale price of groceries and other foodstuffs. This includes price changes that occur within minutes, hours, days, or across separate transactions, and price changes based on a consumer’s behavior, inferred data, or personally identifiable information.

The bill further prohibits retail food stores that are 15,000 square feet or larger from using an electronic shelf label system until four years after the effective date of this bill.

Additionally, the provisions of this bill clarify that surveillance-based price discrimination, dynamic pricing, and personalized pricing do not include a reduction in the posted sale price that is uniformly offered or made available to all consumers who meet disclosed eligibility criteria.

Furthermore, retail food stores may continue to offer loyalty, membership, or reward programs, provided that any personally identifiable information collected to administer those programs is not used to personalize, optimize, or otherwise modify the sale price of groceries and other foodstuffs.

Finally, the bill requires the Division of Consumer Affairs to conduct a study, no later than 12 months after the effective date of this bill, on the use of electronic shelf label systems and their impact on pricing transparency and employee job security, and to submit a report with findings and recommendations to the Governor and the Legislature.

A violation of the bill’s provisions is an unlawful practice under the consumer fraud act, punishable by a monetary penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. In addition, violations may result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.