Weights and Measures Legal News: AI-Powered Dynamic Pricing Strategies Could Create Consumer Protection Concerns

May 2024

Dynamic pricing, which is sometimes called surge or time-based pricing, is becoming more common in brick-and-mortar grocery stores and could create weights and measures consumer protection concerns. This pricing strategy involves frequent product price variations designed, at least in part, to maximize a retailer’s sales and profits. Dynamic pricing has been used in various contexts, such as airline tickets, hotel rooms, rideshare services, and entertainment event tickets. More recently, however, retail grocery stores have begun using dynamic pricing to sell consumer goods, such as milk, bread, and eggs.

Pricing accuracy, charging the lowest advertised price, and avoiding deceptive practices are some of the potential concerns from a weights and measures legal compliance perspective for the new dynamic pricing trend. Walmart, Target, Best Buy, and Kroger are among the retailers that use dynamic pricing, with Walmart starting to deploy digital shelf tags in 500 stores over approximately the last year. Traditionally, store associates switch out store shelf tags manually when prices change; however, retailers can now use AI-powered technology, such as Vusion electronic shelf labels, to update prices instantly through a wireless connection.

It is important to consider what could happen if a dynamic price change occurs during the course of a customer’s shopping experience. For instance, what if the price of a prime rib roast or bag of red potatoes increases between the time the consumer selects the item based on the price advertised on the electronic shelf label and when the consumer is charged at the checkout? Under California law, a surge pricing change that raises the price of a product during business hours could violate consumer protection requirements and may be considered a prohibited unfair or deceptive business practice under California’s Business and Professions Code sections 17200 and 17500, et seq. Grocery store companies that adopt these dynamic pricing practices should be aware of the potential weights and measures compliance vulnerabilities that accompany use of such emerging technologies.

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