MD is right to crack down on exploitative pricing

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Maryland’s top leaders don’t usually show up together for routine committee hearings. But during the legislative session, Gov. Wes Moore and House Speaker Joseline Peña-Melnyk did exactly that — testifying side by side in support of House Bill 1475. This legislation aims to crack down on companies that are charging different people different prices for the exact same product without disclosing that they are doing so.

For many Marylanders, what used to be a fixed price is now fluid and increasingly shaped by factors consumers can’t see or control.

Dynamic pricing — the practice of prices changing in real-time, often with the help of algorithmic computer software — itself isn’t inherently bad. Prices should rise when demand is high and fall when demand is low. What’s worth worrying, though, is what dynamic pricing is turning into.

Today, it’s not just about supply and demand. It’s increasingly about who you are.

Companies can now use personal data — browsing history, location, purchase behavior, even how urgently you seem to need something — to estimate what you’re willing to pay, causing you to be charged a different price than your neighbor next door, even if you placed your order at the exact same time.

In other words, prices are no longer set by the market. They’re set through discriminatory tactics.

This isn’t pro-consumer policy. It’s consumer abuse, and it must be stopped.

But how we go about fixing this problem also matters.

The solution should not be banning all forms of dynamic pricing.

Again, businesses should still be able to adjust prices based on how much demand there is for what they’re selling.

For example, in the housing industry, algorithmic pricing is used to track broad market conditions such as supply and demand and vacancy rates. Research has confirmed that dynamic pricing in this context can benefit renters by slashing rental prices faster when demand declines. A blanket ban on this practice, such as the one proposed in House Bill 434 in the Maryland Assembly and Bill 8-26 in Montgomery County, could thus ultimately hurt renters.

But examples of dynamic pricing like this far different than, say, Amazon making your order of Amazon Fresh groceries more expensive than your friend’s because the data the corporation has on you suggests that you will likely pay more.

What we need to ban is not ban this practice but rather prohibit companies from using their customers’ personal data to adjust prices without disclosure. That’s exactly what HB 1475 is all about. This bill will allow Maryland residents to decide for themselves which instances of algorithmic pricing make sense for them and their families and which don’t.

Maryland’s lawmakers have good reason to draw the line on algorithmic pricing on transparency, setting clear rules to prevent data-driven price discrimination.

If lawmakers choose to look the other way, then the free market will continue to be one in which the price isn’t only based on the inherent worth of something, but also on how much you can be milked for.

That’s crony capitalism, not capitalism. And Maryland is right to push back.

Dr. Mark A. Wainwright is a Maryland social and civic leader who serves as Senior Pastor of the 1st Baptist Church.