• by Wendy Davis , Yesterday

New York's attorney general's office is questioning Instacart about its compliance with a new state statute requiring companies to disclose their use of algorithms that set prices based on personal data.

"We have some concerns about Instacart’s attempts to comply with the Act," assistant attorney general Ryan Galisewski said Thursday in a letter to Instacart. 

Galisewski adds that even though Instacart makes a disclosure about algorithmic pricing on a web page linked to some retailers' front pages, that disclosure appears insufficient because it isn't "clear and conspicuous."

He also writes that there was no disclosure on other pages, including pages displaying prices.

An Instacart spokesperson said Thursday: "We believe we are in full compliance with New York’s Algorithmic Pricing Disclosure Act, and we are committed to leading with industry best practices in this area. We look forward to responding to the Attorney General’s questions to further clear up any misunderstandings about our prior and current practices.”

New York's Algorithmic Pricing Disclosure Act, which took effect on November 10, requires companies that use algorithms for personalized pricing -- meaning dynamic pricing based on data that's linkable to consumers or their devices -- to make the following disclosure: “This price was set by an algorithm using your personal data."

The letter asks Instacart for a trove of information, including pricing agreements with eight stores (Target, Stop & Shop, Wegmans, Best Buy, Key Food, Aldi, ShopRite, and Costco) and six consumer packaged goods brands (Frito-Lay, Hormel Foods, Nabisco, Oscar Mayer, Pepsi, and Coca Cola).

Among other specific questions, Galisewski asks Instacart to explain how consumer data may be used for pricing and promotions.

The letter comes around one month after Consumer Reports and others reported that Instacart charged varying prices for the same items in the same stories.

For instance, according to that report, a box of 10 Clif Chocolate Chip Energy bars sold for $19.43, $19.99, and $21.99 on Instacart at a Safeway store in Seattle.

Instacart announced on December 22 -- around two weeks after the report came out -- that it was ending what it called "item price tests on our platform."

"Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices -- period," the company wrote last month.

Instacart's spokesperson added on Thursday that its prior tests "were not personalized or surveillance pricing," and that it "never used personal, demographic, or behavioral data to set online item prices on Instacart."

Last month, Senator Ruben Gallego (D-Arizona) introduced legislation to outlaw so-called "surveillance pricing" by broadly prohibiting companies from customizing prices based on consumers' personal data. 

The One Fair Price Act specifically would make it illegal to set prices based on an individual's biometrics, behavior or personal information -- including address, citizenship status, weight, genetic data and that's reasonably linkable to that person or household. 

The proposed law has some exceptions, including one that would allow companies to offer discounts to consumers who enroll in loyalty programs.