Investigation finds Kroger uses customer data to estimate income and target discounts—sometimes inaccurately.
Shoppers with lower predicted income or education may receive fewer deals, while personal data is shared with over 50 companies.
Consumer advocates call for stronger privacy protections and an end to “surveillance pricing.”
A new Consumer Reports (CR) investigation has revealed that Kroger, one of the nation’s largest grocery chains, is using sophisticated data analytics to profile customers by estimated income and education levels—and using those predictions to decide who gets access to premium discounts.
The practice is raising alarms among privacy advocates and consumer rights groups, especially since CR found that Kroger’s “income predictor” can be wildly inaccurate, potentially denying low-income shoppers access to the best prices
According to CR’s findings, Kroger creates detailed consumer profiles using its loyalty program, which is linked to over 95% of purchases. These profiles incorporate an “income predictor,” which estimates a shopper’s income level. That estimate is then used to determine how “loyal” a shopper is—and whether they’ll be targeted with premium brand deals.
CR found that shoppers predicted to have lower income or education levels could receive fewer or less valuable discount offers than others. And because the predictor can be wrong, consumers may be penalized based on faulty assumptions.
“Regardless of whether these consumer profiles are accurate or not, we need to rein in the rampant overcollection and misuse of consumer data,” said Justin Brookman, CR’s Director of Technology Policy.
Data sold, shared widely
One consumer, using Oregon’s new data privacy law, requested their data from Kroger and discovered it had been shared with over 50 companies, including:
Tobacco and financial firms
Major data brokers
Healthcare and fintech platforms, including companies that process SNAP (food stamp) benefits
The customer’s profile was used in Kroger’s precision marketing division, which sells consumer data for targeted advertising—a practice that now makes up more than 35% of Kroger’s net income, under what the company calls its “alternative profit” model.
“Consumers should be able to go to the grocery store and put together a meal for their families without finding themselves on the menu,” added Lindsay Owens, Executive Director of the Groundwork Collaborative.
Call for federal action
With state privacy laws like Oregon’s helping to expose these practices, CR and other advocacy groups are calling for stronger national consumer data protections and a ban on “surveillance pricing,” which allows corporations to tailor prices based on profiling.
“We urge lawmakers at both the state and federal levels to enact strong privacy protections,” Brookman said. “It’s especially alarming to see Kroger distributing customers’ personal information so broadly.”