Consumer Reports Blasts Kroger's Surveillance Pricing as Calif. Weighs Bill
Grocery chain Kroger collects vast amounts of personal data about its customers and makes inferences based on it, resulting in different shopping experiences, Consumer Reports (CR) said Wednesday. While Kroger responded that the CR report is misleading, a California legislator said it supports his argument for passing his surveillance-pricing bill.
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CR said Kroger uses the data to create an “income predictor” about customers. As a result, shoppers are offered discounts targeted to them, despite possible inaccuracies in the predictions. CR said lawmakers should halt the chain's surveillance pricing and abuse of collected data.
“Regardless of whether these consumer profiles are accurate or not, we need to rein in the rampant overcollection and misuse of consumer data and ensure that companies like Kroger are held accountable when they violate the trust of consumers and harm their pocketbooks,” said Justin Brookman, CR director of technology policy.
Brookman continued, “It’s especially alarming to see Kroger distributing customers’ personal information so broadly. We urge lawmakers at both the state and federal levels to enact strong privacy protections and to prohibit the practice of surveillance pricing.”
CR's investigation found that not only did Kroger compile data and create customer profiles, but it repackages and sells collected information to other companies, which they use for ads and marketing. CR has launched a petition demanding Kroger stop sharing and selling customer data, and asking that all loyalty shoppers get offered the same discounts.
However, Kroger said customers can correct inaccurate data compiled about them, and that information about its data-collection practices and policies is disclosed in the company's privacy policy.
“It is disappointing to see Consumer Reports publish a story that is misleading and fundamentally misrepresents how Kroger responsibly uses data to benefit customers,” said a Kroger spokesperson in a statement emailed to us. “What makes this even more troubling is that Consumer Reports deceptively criticizes Kroger's advertising practices while they themselves purchase sensitive data from data brokers and sell it to support their advertising, as reflected in its privacy policy.”
The California legislature is considering a bill regarding surveillance pricing. The state's House recently passed the measure; it's now in the Senate (see 2505130007). AB-446, introduced by Assemblymember Chris Ward (D), would prohibit companies from using personal data to set customized prices for consumers (see 2505060064).
“The recent Consumer Reports investigation into Kroger’s data practices makes one thing clear: surveillance pricing is not a hypothetical threat -- it’s happening right now,” said Ward in an emailed statement to Privacy Daily. “Companies are gathering personal information through digital surveillance to create consumer profiles and can assign prices accordingly. That’s not just invasive -- it’s unfair and unacceptable.”
The legislation "would ban surveillance pricing in California and make it illegal for companies to use personal data to set individualized prices without transparency or consent,” Ward continued. “No one should pay more just because an algorithm predicts they can."
Late last year, Justin Kloczko, a tech and privacy advocate from Consumer Watchdog, wrote a report about surveillance pricing that Ward used in crafting AB-446.
“If Kroger is overcharging people based on data and also selling data, then I can’t think of anything more irresponsible than a 10-year ban on [enforcing] state-level AI regulation like the one Congress is trying to pass right now,” Kloczko emailed Wednesday. “These findings are exactly why we need laws to protect our data privacy and stop surveillance pricing.”