New Jersey Enacts Fair Price Protection Act, Prohibiting ‘Surveillance’ Pricing for Groceries

New Jersey Governor Mikie Sherrill recently signed the Fair Price Protection Act, which prohibits the use of consumers’ personal data to set or adjust prices for groceries and other defined categories of household goods. This prohibition takes effect on August 1, 2027 and provides that prohibited “surveillance pricing” constitutes an unlawful practice under the New Jersey Consumer Fraud Act. The act includes exceptions that preserve the ability to account for specified cost differences and openly offer qualifying discounts and loyalty program benefits.

The legislation’s focus on groceries and related household necessities reflects a substantial narrowing of the initially introduced legislation, which addressed pricing for merchandise and services generally. The Fair Price Protection Act (the Act) [1] also establishes a one-year moratorium, beginning February 1, 2027, on the new use of electronic shelf labels while the New Jersey Innovation Authority studies that technology.

Together with recently enacted laws in Connecticut and Maryland and similar legislation passed by the New York Legislature and pending review by New York Governor Hochul, the Act reflects the growing state-level regulation of algorithmic pricing in the grocery retail space. Businesses selling groceries in New Jersey or providing pricing, analytics, loyalty-program, or electronic shelf-label services should evaluate their pricing models, data practices, disclosures, and deployment plans.

PROHIBITION ON ‘SURVEILLANCE PRICING’

The Act makes it an unlawful practice and a violation of the New Jersey Consumer Fraud Act for any person to use “surveillance pricing” or any other pricing strategy that determines or varies the sale price of groceries and other foodstuffs based, in whole or in part, on personal data.

“Surveillance pricing” includes prices determined, adjusted, optimized, or recommended by an algorithm or automated system using personal data and resulting in price variation for individuals or groups. It also includes pricing based on data collected through electronic surveillance technologies, including sensors, cameras, device tracking, biometric monitoring, and other tools that observe behavior, characteristics, location, or other personal attributes in physical or digital environments. “Personal data” means information linked or reasonably linkable to an identified or identifiable consumer.

The Act applies to “groceries and other foodstuffs,” but the definition of that term extends beyond edible products to paper goods, household cleaners, health and beauty products, and pet foods and supplies. Prepared food and beverages sold by establishments primarily engaged in immediate-consumption food service are excluded. “Price” includes advertised or offered amounts before or after discounts and after fees and other material terms are applied.

PERMITTED PRICE DIFFERENCES AND DISCOUNTS

The Act permits certain price differences and discounts, principally:

• Price differences based on reasonable costs associated with providing groceries and other foodstuffs to different consumers, provided that the price is not changed more than once in a 24-hour period
• A bona fide discount with eligibility conditions that are publicly and conspicuously disclosed and uniformly offered to any member of a broadly defined group, such as teachers or veterans
• A bona fide discount offered through a voluntary, opt-in loyalty program, provided that pricing benefits are offered under uniform terms and conditions and the program makes certain required disclosures

Loyalty programs must clearly and conspicuously disclose pricing benefits, available discounts, and data practices to participants; all terms, conditions, and data practices must be public. Required disclosures also must be provided to the Division of Consumer Affairs within 14 days of a request. A bona fide discount must be a verifiably genuine reduction from a recent regular public price. Personal data used for a permitted price difference may not be repurposed without consent.

ELECTRONIC SHELF LABEL MORATORIUM

The Act establishes a one-year moratorium on the new use of electronic shelf labels in New Jersey beginning February 1, 2027. It does not require businesses to remove existing electronic shelf labels and permits new labels to be purchased, installed, or deployed solely to repair or replace labels already operating at the same place of business.

The New Jersey Innovation Authority, with the Division of Consumer Affairs, must study electronic shelf labels and their impact on surveillance pricing. The study provision took effect immediately, and a report is due six months before the moratorium expires. After the moratorium, new labels may be used in compliance with applicable law unless the Legislature provides otherwise.

ENFORCEMENT AND EFFECTIVE DATES

Violations may carry civil penalties of up to $10,000 for a first offense and $20,000 for subsequent offenses under the Consumer Fraud Act. The Attorney General may seek injunctive relief, compliance, actual monetary damages for negligent-or-greater violations, and other restitution, penalties, or relief. Other Consumer Fraud Act remedies may include cease-and-desist orders, punitive damages, and treble damages and costs in qualifying actions.

PRACTICAL COMPLIANCE CONSIDERATIONS

Businesses using or considering the use of consumer-specific data in connection with grocery pricing or discount offers in New Jersey should consider what compliance steps may be appropriate, including the following:

• The data inputs and processes used by pricing algorithms and automated systems, including inputs supplied by affiliates, delivery platforms, and other vendors
• Whether personal data, including online activity, location, purchase history, device data, biometric information, or in-store observations, affects a price, discount, fee, or other material term
• The operation of loyalty and group-based discount programs, including voluntary enrollment, uniform terms, required disclosures, and documentation that discounts are bona fide
• Electronic shelf-label deployment, repair, and replacement plans, together with internal consent, data-use, and recordkeeping controls

Companies operating in multiple states should also monitor developments in New Jersey alongside emerging requirements in other jurisdictions, as the regulation of algorithmic and “surveillance” pricing continues to develop rapidly at the state level.

HOW WE CAN HELP

Our lawyers regularly advise clients on emerging AI and algorithmic pricing regulation, state attorney general enforcement, consumer protection, and pricing and competition law. We are monitoring relevant developments and stand ready to assist businesses with questions they may have.