NY Law Forces Brands to Reveal Algorithmic Pricing
New York State is forcing businesses to disclose when they use personal consumer data to manipulate costs, implementing a groundbreaking budget rule that targets covert algorithmic price discrimination.
How the New Algorithmic Pricing Law Works
Under the state’s newly passed budget, companies utilizing personalized pricing models must now display a clear warning to shoppers. According to The New York Times, businesses are legally required to notify customers with the exact phrase: “This price was set by an algorithm using your personal data.” This measure aims to protect consumers from being charged more simply because their digital history suggests they have a tendency to splurge.
Tech Giants and Retailers Push Back
While the regulation is now active, the actual prevalence of personalized pricing across online retail remains highly debated. Ride-hailing giant Uber has already started displaying the mandatory disclosure to users in New York. However, an Uber spokesperson criticized the legislation, labeling it “poorly drafted and ambiguous.” The company maintains that its dynamic pricing model relies strictly on geographic location and real-time customer demand rather than individual user profiles.
The retail industry has also mounted a strong defense. The National Retail Federation previously filed a lawsuit in an attempt to block the mandate, but a federal judge ultimately dismissed the challenge, allowing the consumer protection law to move forward.
A Crucial First Step for Digital Consumer Rights
Lina Khan, the former chair of the Federal Trade Commission (FTC) who currently serves as co-chair of the mayoral transition team for Zohran Mamdani, praised the initiative. Khan told the NYT that the disclosure requirement serves as an “absolutely vital” regulatory tool for the government. However, she emphasized that this is just the beginning of a larger battle, noting there is still a “ton more work to be done” to fully regulate predatory pricing algorithms.
