Evan Schuman's StorefrontBacktalk

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

What does the “price” of an item mean? If you pick up a can of corn at the Piggly Wiggly and the electronic shelf label (ESL) says it is $1, but the price changes when you walk up to the register, what price is the merchant legally required to deliver? Although any reasonable merchants would likely honor the lower price, must they do so? What about an online store, where the price of an item might easily be changed between the time a customer puts it in his shopping cart and the time he checks out?

There are two different legal precedents for these situations—and in fact, they go in exactly opposite directions. That creates an inherent problem, for both consumer relations and the law. Customers could feel cheated if price changes don’t work the way the customer expects. And as ESLs make in-store pricing work more like online pricing, that could change the way courts see it.

When I was in high school, stock boys were responsible not only for putting items on the shelves but for individually tagging each item (can of corn, $0.35) and ensuring that shelf tags were accurate. This cost the retailers time and money. A few jurisdictions have adopted laws that still require retailers to mark individual items with prices, including California, Connecticut, Illinois, Massachusetts, Michigan, New Hampshire, New York, North Dakota and Rhode Island.

But some of these jurisdictions—Michigan, Connecticut and Massachusetts—exempt stores that use new technologies such as RFID and ESLs, which enable the current price to be displayed on the shelf in addition to being embedded in the item when it is scanned.

The focus of government regulation of these technologies, and older technologies like barcode scanners, has been on whether the technology accurately reflects the price of the item sold. Thus, the FTC conducted studies of “overcharges” and “undercharges” as a result of differences between the price on the shelf or on the item and the price charged at the register.

Although ESL systems can be expensive (more than $200,000 to purchase and install), they eliminate this problem because both the shelf label and the register can be updated by the same system, so the price will always be the same.

As a result, retailers can alter prices more frequently, at lower cost to them, based upon any number of conditions. When times are slow, retailers can offer “instant specials”—even time-limited ones. When there is greater demand (say, in anticipation of a hurricane), the prices of generators, batteries, gas cans, dry ice and various sundries can be increased dynamically.

In this way, brick-and-mortar stores can mimic techniques employed by online stores, dynamically altering prices based on market forces. Sounds good, no?

But legally, what exactly does the “price” mean? If it changes between the time a customer puts it in his real or virtual shopping cart and the time he checks out, what price is the retailer required to honor?

The law provides two opposite precedents.