What is dynamic pricing at grocery stores? Maryland now bans it

Maryland has become the first state in the U.S. to ban stores from engaging in dynamic pricing, a controversial practice gaining traction at retailers nationwide.

Gov. Wes Moore first introduced the Protection from Predatory Pricing Act in January, and it was recently passed by Maryland House lawmakers.

"I can't wait to sign it," Moore said in an April 14 post on X.

Here's what the bill could mean for Marylanders.

What is dynamic pricing?

Dynamic pricing is a strategy used by businesses to base the cost of items through evolving market trends that include supply and demand, competitor pricing and inventory levels, according to Harvard Business School.

In practice, that could mean the price of a product changes multiple times a day, depending on how many people are buying it or how much inventory is left.

The model is similar to surge pricing used in industries like airlines and ride-sharing, where costs increase when demand spikes.

In brick-and-mortar stores, the rise of electronic labels and automated pricing systems has made dynamic pricing more feasible, allowing some retailers to quietly adjust prices throughout the day.

Walmart is among the retailers using these digital shelf labels, but a company spokesperson told the Financial Times the tools are "unrelated to dynamic pricing."

Kroger, Whole Foods and Albertsons are also using the technology.

What does Maryland's Protection from Predatory Pricing Act do?

According to the legislation, the act would prohibit food retailers or third-party delivery service providers from engaging in dynamic pricing "or using consumer personal data to set a price for consumer goods or services."

The act would ensure grocery stores keep their prices the same for at least one business day.

Moore said the legislation can help shield Marylanders "from invasive data practices and unpredictable price spikes."

“Marylanders deserve to know that the price they see on the shelf is the price they will pay at the register,” he said when announcing the legislation.

Once Moore signs the bill, it will go into effect Oct. 1. Businesses who do not follow the new guidelines could be fined up to $10,000 for their first offense.

Not everyone is appreciative of it, however. The American Economic Liberties Project said the legislation is full of flaws that include the exemption of subscription-based pricing, loyalty programs and promotional offers.

“Marylanders deserve real solutions to the very real affordability crisis being exacerbated by surveillance pricing," AELP said in a joint statement with Towards Justice and Tech Equity Action. "Governor Moore should veto this bill and wait for legislation that delivers genuine protections for Maryland consumers."

Consumer Reports also says the final draft of the bill "falls short" in its protection of consumers.

“While it’s encouraging to see the Maryland legislature take up this issue, this bill has loopholes that will limit its real-world impact," Consumer Reports said. "We urge other state legislatures considering personalized pricing legislation to build in stronger consumer protections and avoid loopholes that weakened this bill.”