Unpacked: What Maryland’s dynamic pricing ban says about the electronic shelf label debate

Dynamic pricing and retailers’ use of electronic shelf labels are hot topics in state legislatures this year as rising grocery prices and inflation continue to stress shoppers’ budgets.

The UFCW, or United Food and Commercial Workers union, has made banning dynamic pricing and the use of electronic shelf labels a cornerstone of its state legislative agenda. But retailers and their advocates have pushed back against the effort, citing the safe use of the technology and the existing laws against price gouging.

Here’s a breakdown of the new Maryland law and how it changes the discussions around dynamic pricing in grocery.

What are dynamic pricing and surveillance pricing?

Dynamic pricing and surveillance pricing generally refer to the practice of adjusting prices based on customer data. Those explaining it often reference the practices of airlines, hotels or rideshares, which can adjust prices in real time based on the data they see around demand.

For instance, if a hotel lowers the room rate for a particularly slow weekend to incentivize visits, a competitor may automatically adjust their rates to compete. Higher occupancy levels may, conversely, drive prices higher.

But in the age of artificial intelligence, where companies can have a host of customer data at their fingertips, lawmakers and consumer advocates have raised concerns about the potential for misuse. The Federal Trade Commission in early 2025 released a report that found details like location, mouse movements, un-purchased items and browsing patterns are being used to tailor pricing.

What does Maryland’s law actually ban?

Maryland’s new law, the Protection From Predatory Pricing Act, specifically prohibits retailers from using dynamic pricing to set higher prices on tax-exempt groceries. It defines “dynamic pricing” as the discriminatory practice of offering or setting a personalized price to a specific consumer based on their personal data, regardless of whether the seller collected or purchased the personal data.

Cailey Locklair, president of the Maryland Retailers Alliance, said the industry group was approached early on by state lawmakers to weigh in on a proposal for dynamic pricing. At one point, there were as many as six versions of legislation going around. But, she said, the industry had no qualms about agreeing not to use individualized data to raise prices.

“This is not a common industry practice for us at all,” she said in an interview with Modern Retail. “We were fine to agree to that from the very beginning.”

The law applies to retailers with at least 15,000 square feet that sell tax-exempt food, as well as third-party delivery services like DoorDash. It kicks in on October 1, 2026.

Violating the provision will result in a fine of $10,000 for a first offense and $25,000 for a subsequent offense.

Locklair said the alliance agreed to support the bill because it strikes a balance between using data for pricing and the way the grocery industry actually operates.

“I would be remiss if I didn’t say that that [dynamic pricing] technology is out there. It’s just not something that our industry uses because we are hyper competitive with lower profit margins, and we operate way differently than a lot of other industries,” she said.

Will retailers have to change anything they’re doing?

Maryland’s bill doesn’t immediately change anything for grocers in the state. Rather, it means they can’t use individualized data to raise prices in the future. “If anybody is using any sort of consumer data to drive a price up, that’s illegal in our state now,” Locklair said.

But the bill does grant leeway for other kinds of price changes: retailers can still offer promotional pricing, loyalty program benefits and other temporary discounts.

Locklair said the bill still allows grocers to raise prices for “valid” reasons that come up, like supply and demand, weather, energy costs and other issues outside the retailer’s control — for instance, when an egg shortage hit in early 2025, and retailers were charging higher prices for a dozen eggs nationwide.

What about electronic shelf labels?

Ademola Oyefeso, international vice president and director of the legislative and policy department at the UFCW, said the bill falls short because it doesn’t ban electronic shelf labels altogether, which is a priority of the union’s legislative campaign. Its goal is to require stores to use clear, printed shelf prices that everyone can see and ban “surveillance pricing” so no one is charged more based on their data.

As passed, Oyefeso said the bill still opens the door to potential data-based price hikes based on household information, region or other factors. But he hasn’t ruled out the state coming back to amend the law in the future if other states ban electronic shelf labels, noting the idea had some support early on. “Our hope was to get an ESL ban in the bill. We were unsuccessful in it,” he said. “[Gov. Wes Moore] became supportive, but the legislature, and the Senate specifically, was very against putting any restraint on electronic shelf labels.”

Locklair said the industry is against such a ban in large part because the electronic shelf labels themselves don’t have cameras and can’t identify individuals. Electronic shelf labels have been around for at least 10 years in stores like Best Buy and are being rolled out across Walmart’s fleet this year. Locklair and other industry advocates say that it can actually help address price concerns by being more timely to update than manual stickers.

What are other concerns about the law?

Oyefeso said the bill also has loopholes that could allow grocers to use data to inform pricing in different ways. For instance, while it says grocers can’t use personal data to inform dynamic pricing, de-identified data and publicly available data are not part of that definition.

Maryland’s law also still allows retailers to change prices multiple times a day. That means people could be charged different amounts based on when they shop, potentially raising the opportunity to boost at peak times. “It allows for surge pricing as long as it’s not during an emergency,” he said.

Locklair, though, said the industry fought back against that clause because there may be valid reasons prices need to change. Perishable groceries, for instance, may be discounted at the end of the day to be cleared out before the next day’s batch arrives.

“A retailer should always be able to use consumer data to drive a price down,” she said. “It’s counterintuitive to say otherwise.”

What’s next for the legislative debate?

Locklair said the hope is that this will become a model piece of legislation for the industry in other states where dynamic pricing is being debated and as technology continues to advance.

“It’s a balance here of achieving the stated goal of not using consumer data to increase prices, while at the same time looking at those real reasons that prices increase,” she said. “That is what our law does here, and it really strikes that balance. It’s truly reflective of a framework that is workable for industry.”

Beyond Maryland’s action, multiple states are considering dynamic pricing or shelf label bans. UFCW says lawmakers in at least a dozen states have joined its campaign.

Just this week, the New York State Senate advanced legislation that could affect pricing at grocery retailers, and the state’s Attorney General Leticia James is actively advocating for banning electronic shelf labels altogether. New Jersey lawmakers are also considering a temporary ban on electronic shelf labels.

Oyefeso said the latest inflation numbers and continued concerns about affordability mean the bills are likely to stay in conversation.

“It reinforces our message that groceries are a necessity, and this is not what you do to necessities. People don’t have a choice about buying food,” he said. “What the companies are doing, and, sadly, what’s happening to the economy, is only making the issue more salient right now.”