As California’s legislative session nears its conclusion at the end of the month, CalChamber continues to oppose AB 2564 (Ward; D-San Diego), a bill identified as a Cost Driver because it would significantly increase costs for businesses and consumers alike.
Although the bill is framed as a sweeping “surveillance pricing” ban, its current language could also place costly limits on discounts and promotional offers that consumers rely on in the face of California’s ongoing affordability crisis.
MYTH: AB 2564 only prevents higher prices and does not restrict businesses from offering lower prices.
FACT: AB 2564 prohibits both price increases and decreases if they are based on personal data.
The bill would prohibit retailers from offering a “customized price based, in whole or in part, on personally identifiable information.” Because “customized price” is not limited to a price increase, the bill would regulate prices in either direction, and therefore restrict targeted discounts along with the higher prices that it is intended to stop. CalChamber and its coalition partners support narrowing the bill to price increases, so that lawmakers can address harmful pricing practices without jeopardizing consumer savings.
MYTH: AB 2564 fully protects loyalty programs and other commonly offered discounts.
FACT: AB 2564 preserves these discounts only if retailers comply with detailed eligibility, disclosure, and uniformity requirements. Those conditions could prompt some retailers to narrow or even discontinue their offers to consumers rather than risk noncompliance.
To qualify for an exception, discounts must fall into one of the listed categories in AB 2564. Retailers also would be required to disclose on their websites the eligibility criteria, available discounts, and conditions for receiving or earning each offer. That could prove especially difficult for a small business that lacks the staff to continually track and update discounts, or those businesses that do not operate a website. Some may reduce or discontinue discounts rather than risk getting the rules wrong.
MYTH: Existing California law doesn’t protect consumers’ data in retail transactions.
FACT: California already has a framework governing the use of personal information in connection with discounts, rewards programs, and other financial incentives. AB 2564 would confuse things by adding a new, separate set of pricing restrictions and compliance requirements on top of existing protections.
The existing privacy framework under the California Consumer Privacy Act (CCPA) regulates how covered businesses collect, use, sell, and share consumers’ personal information. The law also governs financial incentives and price differences tied to personal data, requiring businesses to disclose material terms, obtain opt-in consent where applicable, and allow consumers to withdraw participation. State regulators have enforced those requirements against businesses operating loyalty programs, and the Attorney General recently launched an investigative sweep focused on surveillance pricing practices under existing law. The bottom line: AB 2564 would not regulate an otherwise regulated area. Instead, it would create a parallel set of pricing rules that businesses would have to navigate in addition to those under California’s existing privacy framework.
MYTH: Other states are banning surveillance pricing, so AB 2564 should be no big deal.
FACT:Various states are looking at laws around personalized pricing, but many other states have recognized the concerns with surveillance pricing laws unintentionally harming discounts.
Multiple other states are considering, or have acted on, the topic of surveillance pricing, including Maryland, Colorado, New York, Connecticut, and New Jersey. Concerns about unintentionally banning discounts have been raised in every state and have shaped the legislation that followed. Colorado’s Governor vetoed that state’s proposal over concerns about discounts. Maryland specifically exempted discounts from its bill’s coverage. New York did not exempt discounts, but its bill contains much narrower disclosure obligations than AB 2564. In short, every state that has considered this issue has been wary of harming discounts, and AB 2564’s present form would do so.
