New York Attorney General Letitia James recently issued a consumer alert encouraging New Y
orkers to report companies not disclosing their use of algorithmic pricing, as a new state law requires.
Algorithmic pricing allows companies to automatically adjust prices based on individuals
’ personal data, charging some consumers more than others depending on factors like their
location, income, and previous shopping habits.
On November 10, New York’s Algorithmic Pricing Disclosure Act took effect. The law requires m
ost companies that use algorithmic pricing to clearly display a disclosure notifying consumers th
at prices are set using their personal data.
The law does not apply to insurance or other financial services firms that are regulated under fed
eral or state laws, or to some transportation or delivery services that use location in trip pricing.
The new law requires most businesses to include a clear disclosure prominently displayed near price
s stating, “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”
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“The law is clear: if businesses use algorithmic pricing, they must notify consumers,” said James. “N
ew Yorkers deserve to know whether their personal information is being used to set the pri
ces they pay, and if businesses are charging customers different prices for the same products.”
Algorithmic pricing, also known as surveillance pricing, is most commonly used on
businesses’ apps or as part of loyalty programs. According to the attorney general, r
ecent examples include customers being charged more for hotel rooms when b
ooking from a high-income ZIP code and Target shoppers seeing prices increase when they browse online inside a Target store.
The attorney general is urging New Yorkers who believe they have encountered algorithm
ic pricing that is not properly disclosed to file a complaint with her office.
Businesses that do not comply with the law can face a $1,000 penalty per violation.
The attorney general advised consumers they can compare the price or discounts they are offered
online with those listed for the same product offered to others. If it is a unique price or discount, it may have been set using personal data.