New Jersey Just Banned a Pricing Practice That Had Shoppers Worried

Two people standing in the same grocery checkout line, buying the same carton of eggs from the same store, can be charged different prices – and neither of them would ever know it. An AI system reads their data, runs a calculation, and quietly adjusts the number at checkout based on what each person is predicted to pay.

The practice is called surveillance pricing. It uses artificial intelligence combined with personal data – where you shop, what you search online, your location, your purchase history – to predict the highest price you’re personally likely to pay. The number on the shelf may say one thing, but the price you’re ultimately charged can be quietly tailored to what an algorithm has decided about you specifically. While companies have long adjusted prices based on market conditions, surveillance pricing allows retailers to tailor prices based on surveilling the characteristics of individual shoppers, often without their knowledge.

New Jersey has now become one of the first states in the country to make that practice illegal. On July 23, 2026, Governor Mikie Sherrill signed the Fair Price Protection Act into law, protecting New Jersey shoppers from discriminatory surveillance pricing. The law arrives at a moment when grocery costs are already straining household budgets, and when some of the country’s biggest retailers are moving fast to digitize their stores in ways that could make personalized pricing easier to deploy at scale.

What the Surveillance Pricing Ban Actually Does

The Act prevents businesses from using personal information – such as online activity, purchasing history, and location data – to set prices for individual shoppers. That prohibition applies to groceries and household necessities sold to New Jersey consumers. The law takes aim specifically at groceries and not at restaurants or other places that sell food or beverage for immediate consumption.

Governor Sherrill was direct about her intention when signing the bill. Sherrill said surveillance pricing “weaponizes your data against you.” She elaborated that companies “figure out where you live, where you shop and even what you’re Googling and they use that data to calculate specific, often higher prices for items you need, without your knowledge,” according to WHYY.

The law also addresses the hardware that makes rapid price changes possible in physical stores. It implements a one-year ban on new electronic shelf labels and requires the New Jersey Innovation Authority to submit findings no more than six months before the end of the moratorium, along with policy recommendations surrounding the practice. That pause is notable given what major retailers have in the pipeline: Walmart plans to replace traditional paper price tags with digital ones across all of its stores by the end of 2026, according to the UFCW. Electronic shelf labels can update prices in real time across thousands of products without any staff involvement – a feature that consumer advocates worry could eventually be paired with surveillance data to price shoppers individually at the physical checkout. Companies are allowed to repair or replace existing electronic shelf labels during this moratorium.

The Fair Price Protection Act prohibits grocery stores from using shoppers’ digital history, biometric information, or genetic data to tailor prices based on what algorithms predict each customer is willing to pay. Unlike traditional sales or loyalty discounts, surveillance pricing uses your personal data to estimate the highest price you’re willing to pay, rather than offering everyone the same price. Loyalty programs, publicly available group discounts, and standard promotional pricing are all still permitted. As Sherrill put it: “Deals are fine. Surveillance-driven surcharges driving up costs are not.”

What Happens to Companies That Break the Rules

Violations of the Fair Price Protection Act are treated as unlawful practices under New Jersey’s Consumer Fraud Act, carrying a $10,000 fine for a first offense and a $20,000 fine for subsequent offenses. Businesses found liable can also face refund requirements and permit consequences.

New Jersey is the first state to put a lawsuit in the shopper’s hands rather than the state attorney general’s – meaning individual consumers can sue retailers directly if they believe they’ve been charged a surveillance-based price. That’s a significant departure from how Maryland and Connecticut, the two states that enacted similar bans before New Jersey, structured their own laws. Both of those states rely solely on their attorneys general to pursue violations on consumers’ behalf. New Jersey’s private right of action puts enforcement pressure on retailers from two directions simultaneously.

The law takes effect February 1, 2027, giving businesses roughly six months to bring their pricing systems into compliance.

How We Got Here: The Instacart Wake-Up Call

In December 2025, a joint investigation by Consumer Reports, Groundwork Collaborative, and More Perfect Union found that grocery prices differed by as much as 23% between customers on Instacart due to the company’s algorithmic pricing experiments with major grocery partners. The investigation found that Instacart’s algorithmic pricing experiments could result in price differences as high as 23% for certain products and could cost families more than $1,200 a year at checkout. Two people ordering the same cart of groceries through the same app, from the same store, at the same time, could see vastly different totals – with no explanation offered or required.

That same month, the Federal Trade Commission announced a $60 million settlement with Instacart over a related set of deceptive practices. According to the FTC’s case record, Instacart may also be facing yet another FTC investigation into the use of an artificial intelligence pricing tool to engage in individualized algorithmic pricing. The $60 million refund settlement stemmed from FTC allegations filed in the U.S. District Court for the Northern District of California, where the agency claimed Instacart engaged in deceptive practices that misled consumers on fees for its delivery promotion, made it difficult to initiate refund requests, and did not fully disclose Instacart+ membership trial terms.

Prompted by Consumer Reports’ joint investigation with Groundwork Collaborative and More Perfect Union, Instacart announced it would end AI price experiments by grocery retailers on its platform. For legislators watching the episode play out, the practical distinction was thin. If an AI system was using customer data to show different prices to different people, the mechanism looked similar enough to warrant a response.

Three States Have Now Moved, With More on the Way

New Jersey didn’t act in isolation. A clear pattern has emerged at the state level in 2026, with legislatures racing to set rules before the technology becomes standard retail infrastructure.

On April 28, 2026, Maryland Governor Wes Moore signed into law House Bill 895, the Protection From Predatory Pricing Act, making Maryland the first state to regulate personalized pricing – also known as “surveillance pricing” – specifically in the food industry. The law restricts the use of personalized pricing, consumer data-driven pricing, and certain AI-enabled pricing practices, particularly in the food retail sector operating establishments of at least 15,000 square feet and in delivery services. The Consumer Protection Division of the Maryland Attorney General’s Office enforces the Act, with no private right of action available to consumers.

Connecticut followed in June 2026. Connecticut Governor Ned Lamont signed HB 5563 into law, making Connecticut the second state in the nation to enact legislation aimed at curbing personalized pricing. Consumer Reports noted the Connecticut law improved on Maryland’s in several important ways, while also identifying remaining shortcomings. New Jersey’s signing on July 23 made it the third. Meanwhile, the New York legislature also passed a bill, which is awaiting Governor Hochul’s signature, according to Consumer Reports’ advocacy arm. California, Massachusetts, and Illinois are also considering similar legislation.

The bills under consideration in other states vary in their scope and enforcement. Connecticut’s law prohibits retail sellers and third-party delivery services doing business in the state from engaging in surveillance pricing. California’s proposed legislation would prohibit surveillance pricing by all retailers – not just grocers – with civil penalties up to $12,500 per violation or three times that amount for intentional conduct. Illinois’s bill would ban the practice economy-wide and prohibit digital price display technology in large grocery stores, with a private right of action carrying $5,000 in liquidated damages per violation.

The broader concern driving all of this legislation is straightforward. Surveillance pricing is an unfair practice that hurts affordability, contributes to privacy harms, takes advantage of consumers at their most vulnerable, and can discriminate against people based on protected characteristics such as race. When an algorithm trained on purchasing behavior, zip code, and browsing history decides your price, systemic inequalities embedded in that data can quietly show up in what vulnerable consumers are charged for basic necessities.

Concerns about how much retailers already know about their customers are not new. A 2025 Consumer Reports investigation found that Kroger collects vast data profiles for individual shoppers, with inferences about their income, family size, education level, and gender. One shopper, Hazem Salem, obtained his 62-page shopper profile through Oregon’s data privacy law and discovered that nearly all the information about him – including his gender, education, and income – was incorrect.

For shoppers in states where surveillance pricing bans are not yet law, understanding your own data footprint – particularly with delivery apps and grocery loyalty programs – remains one of the most practical steps available. Check whether your state’s privacy laws give you the right to request or delete the data retailers hold on you.

Read More: Who’s Warning You About Higher Prices in 2026

What This Means for You

New Jersey’s Fair Price Protection Act, signed July 23, 2026, makes New Jersey the third state to outlaw surveillance pricing – and the first anywhere to put a lawsuit in the shopper’s hands rather than the state attorney general’s. The law takes effect February 1, 2027. It sets a new standard in a rapidly developing area of consumer law, combining the most aggressive enforcement model yet with a clear prohibition on using personal data to set prices at the grocery store.

The key practical distinction to understand is what the law does and doesn’t cover. Your grocery store’s loyalty card discount is not going anywhere. Neither are weekly sales, member pricing, or promotional offers with publicly stated eligibility. What the law prohibits is the invisible layer of personalization: an AI system quietly deciding that your browsing behavior, income signals, or location suggest you’ll pay more for the same box of cereal than the person in the next checkout lane. If you’re a New Jersey resident, that practice becomes illegal in your state at the start of February 2027 – and if a business violates that right, you can take them to court yourself. For consumers in states still debating similar legislation, following the progress of bills in California, New York, Illinois, and Massachusetts is worth doing: the national standard being set right now will likely determine what protections are available to you in the years ahead.

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AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.