Lalani Pricing Bill Bans Personal Price Hikes, Allows Personalized Coupons

The text as introduced · 1,945 words

90R3162 MLH-D

By: Lalani
H.B. No. 280

A BILL TO BE ENTITLED

AN ACT

relating to a prohibition on the use of certain personalized

dynamic pricing models by a business in this state.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle C, Title 5, Business & Commerce Code, is

amended by adding Chapter 125 to read as follows:

CHAPTER 125. PERSONALIZED DYNAMIC PRICING

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 125.001. DEFINITIONS. In this chapter:

(1) "Dynamic pricing model" means a pricing model that

uses an algorithm or other metric to determine the price of a good

or service based on variables related to the market or a consumer.

(2) "Personal identifying information" means any

information, including sensitive information, that is linked or

reasonably linkable to an identified or identifiable individual.

The term includes publicly available information.

Sec. 125.002. APPLICABILITY. This chapter applies to:

(1) a retailer that conducts business in this state on

a physical premises; and

(2) an online retailer that conducts business in this

state resulting in not less than $10 million in annual revenue.

SUBCHAPTER B. PROHIBITION ON PERSONALIZED PRICING

Sec. 125.021. PROHIBITION ON CERTAIN DYNAMIC PRICING

MODELS. (a) A person may not use a dynamic pricing model to

determine the price of a good if the model:

(1) uses personal identifying information or other

unique qualities of the customer as an input; and

(2) results in a price that is:

(A) unique to the customer; and

(B) greater than the price that would be expected

in the absence of the model.

(b) For purposes of this section, a dynamic pricing model

uses personal identifying information or other unique qualities of

a customer if it uses any public or private information, whether

collected directly from the customer or obtained from another

source, that could provide insight into the customer's purchasing

practices or proclivities, including:

(1) the customer's purchase or transaction history;

(2) the customer's Internet browsing or search

history;

(3) the personal behavior of the customer when using

an electronic device or the Internet;

(4) the customer's precise geolocation data, as that

term is defined by Section 541.001;

(5) information about the customer or the unique

qualities of the customer that is obtained from a data broker, as

that term is defined by Section 510.001, or another third party;

(6) publicly available information that can be used to

infer the unique qualities of the customer; and

(7) any other information that could be used to infer:

(A) the customer's ability or willingness to

purchase a good or service at a certain price;

(B) the customer's sensitivity to price

fluctuations for a good or service;

(C) the urgency of the customer to purchase a

certain good or service in a timely manner; or

(D) the likelihood of the customer to engage in

certain shopping practices or techniques, including by comparing

the price of a good or service at multiple retailers.

(c) For purposes of this section, a dynamic pricing model

results in a price that is greater than the price that would be

expected in the absence of the model if the model makes any change

that leads to an increased final retail price for a customer when

compared to the price the customer would pay without the model,

including by:

(1) increasing the base price of a good or service;

(2) adding or increasing a fee or surcharge;

(3) withholding or reducing the amount of a discount

that is or should be available under reasonably comparable

circumstances; or

(4) otherwise influencing the final retail price for

the customer.

(d) This section may not be construed to prevent the use of a

dynamic pricing model otherwise permitted by this chapter solely on

the basis of the method or technological manner in which the model

is operated, including on the basis that the model:

(1) uses machine learning, a software algorithm, or an

artificial intelligence system, as that term is defined by Section

551.001, to determine the price of a good or service;

(2) uses or includes a specific type of predictive or

statistical modeling;

(3) changes the price of a good or service often or

quickly, whether automatically or because of a manual change; or

(4) displays prices in an electronic or other

easy-to-change format.

Sec. 125.022. DYNAMIC PRICING MODEL PROVIDED BY THIRD

PARTY. (a) Except as provided by Subsection (b), a person is

considered responsible for the use of a dynamic pricing model even

if the model is provided or administered by a third party.

(b) A person who uses a dynamic pricing model prohibited

under Section 125.021 that is provided or administered by a third

party is not responsible for a violation of this chapter if the

person:

(1) reasonably evaluated the model and the model's

provider before beginning use;

(2) received written assurance from the third party

that the model did not violate this chapter; and

(3) reasonably believed in good faith that the model

did not violate this chapter.

Sec. 125.023. RETENTION OF RECORDS RELATING TO MODEL. A

person who makes use of a dynamic pricing model not prohibited by

Section 125.021 shall:

(1) keep records relating to the model, including:

(A) a list of any algorithms or related software,

including artificial intelligence systems, as that term is defined

by Section 551.001, that play a role in the operation of the model;

(B) the operational structure or code related to

any algorithm or related software listed under Paragraph (A);

(C) any metrics or categories of personal

identifying information used by the model; and

(D) any material factors that affect the

determination of the price of a good or service; and

(2) retain the records described by Subdivision (1)

for a period of not less than two years.

SUBCHAPTER C. PERMITTED DYNAMIC PRICING MODELS

Sec. 125.041. MARKET-BASED DYNAMIC PRICING MODELS. (a)

This chapter may not be construed to prohibit:

(1) price variation related to identifiable costs

attributable to providing retail services; or

(2) price fluctuations applicable to all customers at

a retail location.

(b) This chapter does not prohibit a person from using a

dynamic pricing model intended to adjust the price of a good or

service to reflect legitimate and identifiable market-based or

transaction-influenced factors, including:

(1) changes in the supply of or demand for the good or

service;

(2) differences in the nature, characteristics, or

quality of similar goods or services;

(3) changes in the cost to acquire inventory or other

inputs for the good or service;

(4) changes in the cost of labor, energy,

transportation, or other expenses involved in providing retail

services;

(5) differences in the time or place of a transaction,

including the:

(A) time of day;

(B) date or day of the week;

(C) season, including weather or climatic

considerations;

(D) distance from the source of or shipping

constraints for the good or service or a component of the good or

service; or

(E) manner in which the purchase is transacted or

will be fulfilled;

(6) changes to the local geographic market conditions;

(7) the capacity of the person to accept additional

customer traffic, including due to occupancy limits on a physical

premises;

(8) differences in the imposition of taxes or fees

based on the location or nature of the market;

(9) differences in the cost of shipping a good to a

different location; or

(10) other objective, determinable factors that could

reasonably affect the price of the good or service.

Sec. 125.042. REWARD OR CUSTOMER LOYALTY DYNAMIC PRICING

MODELS. (a) This chapter may not be construed to prohibit

promotional pricing, loyalty benefits, clearance sales, or other

temporary discounts that are:

(1) available to multiple customers on the same terms;

(2) optional and selected into by each participating

customer; and

(3) intended to attract or retain customers.

(b) This chapter does not prohibit a person from using a

dynamic pricing model intended to adjust the price of a good or

service to reward or incentivize new or loyal customers, including:

(1) sales, rebates, or promotional discounts;

(2) coupons, including personalized coupons;

(3) loyalty or rewards programs, including

memberships or club pricing;

(4) discounts provided as part of a customer service

or customer retention effort;

(5) discounts for customers who are students, members

of the armed forces, veterans, seniors, educators, first

responders, government employees, or similar classes of customers

known to receive similar discounts;

(6) discounts or price cuts associated with or

provided through public or private financial assistance programs;

or

(7) other customer benefits that meet the description

in Subsection (a).

Sec. 125.043. DYNAMIC PRICING MODELS FOR NEGOTIATED

TRANSACTION. (a) This chapter may not be construed to prohibit

changes in price inherent to a negotiated transaction.

(b) This chapter does not prohibit a person from using a

dynamic pricing model to help the person respond to various factors

of a bona fide individualized negotiation with a customer,

including:

(1) the amount of the customer's offer or

counteroffer;

(2) the nature of any contractual terms sought or

offered by the customer;

(3) personal identifying information provided or

introduced by the customer as part of the negotiation;

(4) the value of any nonmonetary consideration offered

by the customer, including a trade-in or return;

(5) the proposed or anticipated financing structure,

if applicable; or

(6) other information, including market-based

information described by Section 125.041, that could reasonably

affect the price of a good or service under negotiation.

(c) A person may not use a dynamic pricing model to help the

person respond to various factors of a bona fide individualized

negotiation with a customer if the model uses personal identifying

information or other unique qualities of the customer that were not

provided by, introduced by, or consented to by the customer.

Sec. 125.044. DYNAMIC PRICING MODEL FOR RANDOMIZED PRICING

TEST. This chapter does not prohibit a person from using a dynamic

pricing model as part of a randomized pricing test if the model:

(1) assigns or determines the price of a good or

service for a customer in a manner that is genuinely random;

(2) does not use personal identifying information or

other unique qualities of the customer as an input;

(3) uses personal identifying information or other

unique qualities only for the purpose of evaluating the randomized

pricing test and determining appropriate pricing for future

transactions; and

(4) does not use, generate, or retain any personal

identifying information or other unique qualities for use in any

dynamic pricing model that violates Section 125.021.

Sec. 125.045. DYNAMIC PRICING MODELS FOR CERTAIN REGULATED

ACTIVITY. This chapter does not prohibit a person from using a

dynamic pricing model as part of an industry or practice that is

regulated in a manner that requires the type of individualized

pricing prohibited by this chapter, including:

(1) insurance underwriting or rating;

(2) credit and lending decisions;

(3) rates of taxes, utilities, or tariffs;

(4) health care reimbursement or cost-sharing

arrangements;

(5) government pricing or benefit programs; or

(6) pricing conduct preempted by federal law.

SUBCHAPTER D. ENFORCEMENT

Sec. 125.061. (a) A violation of this chapter is a

deceptive trade practice under Subchapter E, Chapter 17, and is

actionable under that subchapter.

(b) For purposes of this chapter, each day in which a person

uses a dynamic pricing model in violation of this chapter

constitutes a separate violation.

SECTION 2. Chapter 125, Business & Commerce Code, as added

by this Act, applies only to a dynamic pricing model in use on or

after September 1, 2028. A dynamic pricing model in use before that

date is not governed by Chapter 125, Business & Commerce Code, as

added by this Act, for purposes of determining whether a violation

has occurred.

SECTION 3. This Act takes effect September 1, 2027.