The Seattle City Council voted Tuesday to limit how companies use personal data to set prices in grocery stores. The move will prohibit large grocery stores from using algorithmic pricing for individual customers in an effort to prevent price gouging and discrimination in grocery stores.
Supporters of the restrictions say discrimination could already be happening in Seattle grocery stores, where shoppers use apps tailored to them for coupons. Some large retailers have also started to roll out digital tags that could, in theory, change based on who is in the aisle—especially if they use those apps.
Individualized discrimination based on data mining is already happening, especially online through delivery. As Stranger contributor Guy Oron explained last week, volunteers in a Consumer Reports investigation shopped the same Seattle Safeway through Instacart and saw significantly different prices quoted in their baskets of identical goods.
The bill, proposed by Mayor Katie Wilson and Councilmember Alexis Mercedes Rinck, would allow the city to go after grocery stores for algorithmic pricing, and also create a pathway for consumers to sue if they are ripped off.
Ahead of the vote, during her budget speech, Wilson lauded the measure which “will make Seattle the first city in the country to take on algorithmic price discrimination for groceries.”
The ordinance applies to grocery stores with more than twenty locations worldwide. (That will spare independent grocery stores like PCC and its 16 locations, where we wouldn’t expect algorithmic pricing anyway; and we know better than to look at the prices there because they are high).
Sponsored by Rinck, and co-sponsored by Councilmember Dionne Foster, and Councilmember Rob Saka, the bill does preserve traditional discount categories for seniors, veterans, and other groups. But it should prevent algorithms from gouging based on life circumstances like pregnancy, grief, or income. UFCW 3000, which represents grocery workers, backed the legislation, while grocery lobby groups pressed the council for a personalized-discount exemption.
In public comments, lobbyists for large grocery stores chains humbly begged the council to weaken the bill by passing amendments sponsored by surveillance fan and Councilmember Bob Kettle.
Kettle tried various ways to water the bill down.
He tried to allow algorithmic discrimination for discounts (but not higher prices). He tried to make it harder for customers to sue. He tried to let the lobbyists dilute the law by letting any future state law erase it. He didn’t explain why allowing opaque price discrimination on discounts would be a good thing, aside from making the stores more money.
As the city clerk explained, allowing algo-driven discounts simply creates a secret tier of pricing. So companies could jack up the sticker price, make you think you are getting a discount on your app, but actually have you paying more than the person next to you.
One measure backed by Kettle did pass: the city will compile an annual report on the impacts of the algo ban, allowing the council to evaluate its effects.
That report might be read nationally, as other states and cities consider similar algo bans. The New York State Legislature passed a similar measure this spring, but Governor Kathy Hochul has until the end of the year to sign it, Reuters reports. That’s a lot of time for lobbyists to weaken consumer protections.
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