Calif. Privacy Committee Supports Restricting 'Surveillance Pricing'

The committee voted 10-2 for an amended AB-446 at the late-Tuesday hearing. That was enough to advance the bill, though the committee left the roll call open for members who weren’t present. The bill by California Assemblymember Chris Ward (D) aims to stop the practice of using consumers’ personal information to adjust prices based on individualized data profiles (see 2502070017).

Committee amendments adopted at the hearing exempt “common pricing practices such as differences of cost of business, loyalty programs, and discounts for specific groups, such as teachers, active service members, and senior citizens,” said a committee analysis. Also, the committee modified the measure to exempt insurers and clarify the definition of personally identifiable information, it said.

Ward told the committee that a "growing body of evidence" shows consumers are paying different prices based on their personal characteristics. Yet a consumer doesn't know this unless they ask another consumer what they paid. The practice runs afoul of consumer expectations, is “predatory” and “violates public trust,” said Ward. "We have always believed that there should be one price for one good for all people."

"California already has some of the strongest privacy laws in the country that give consumers control over the data,” continued Ward, “but this emerging practice appears to exist through loopholes that allow companies to charge different prices based on that data.”

Consumer Watchdog President Jamie Court testified in support of the bill. “Companies are using our data against us." The FTC was investigating the issue but stopped after Donald Trump became president, added Court. Other supporters who appeared at the hearing included TechEquity, Privacy Rights Clearinghouse, Consumer Federation of America and several labor groups.

But retailers and other business groups, including TechNet, the California Chamber of Commerce, California Grocers Association, California Retailers Association and the California Broadband & Video Association, opposed the legislation.

AB-446 conflicts with California Consumer Protection Act requirements for loyalty programs and will make it harder to provide offers that customers like, said Robert Moutrie, CalChamber senior policy advocate. Also, problematically, the bill would treat aggregate data under CCPA as personal data, he said.

Loyalty programs "give our customers what they want,” said Daniel Conway, government relations vice president for the California Grocers Association. Also, Conway doubted it would be practical for physical stores to set different prices for individual consumers even if they used electronic price tags.

However, business witnesses’ reassurances didn’t deter Assemblymember Liz Ortega (D) from supporting the bill. "You are using my personal information to price gouge me,” she said to the witnesses.

Ward said he wants to allow loyalty programs that help people save money, but one group shouldn’t have greater access to a loyalty program than another based on their personal information. Also, Chair Rebecca Bauer-Kahan (D) said her committee will ensure that the bill works with the CCPA.

Assemblymember Cottie Petrie-Norris (D) said she can’t support the bill yet. “This notion of surveillance pricing does seem like this sort of very creepy dystopian future,” she said. But Petrie-Norris also understands that if “I opt out of the CCPA, you can't use my personal information period,” she said. “So you certainly can't use my personal information to determine my price." If the concern is that few people are opting out, a better policy might be to raise awareness about the CCPA, she said.

Vice Chair Diane Dixon (R) asked why consumers would patronize a store they believe is specifically charging them a higher price. Consumers could shop at a competitor, she said. “That's what the marketplace does." AB-446, however, "is getting into a nanny state … that is concerning to me."

Consumers can decide where to shop, agreed Rep. Stan Ellis (R): The bill is “taking the responsibility out of the hands of the consumer."

Not all consumers may have options, responded Bauer-Kahan. San Francisco has one brand of grocery store, for example, she said. “It's really important that this bill move forward because … technology and the constant surveillance of our actions, our spending are being used to increase prices for Californians who cannot afford it right now."

Rep. Isaac Bryan (D) supported the bill as “a righteous cause, albeit very complicated."