"Dynamic Pricing" Disclosure Requirement Passed in New York

The practice of “dynamic pricing,” which sets a personalized price for a particular consumer based on data the seller has collected about that consumer, is under scrutiny in state houses across the country.  (Regulators often refer to it as “surveillance pricing,” which gives you some idea of how they view it.)  Several states have tried to ban or limit the practice, especially as AI usage becomes more widespread.  The federal government, through the FTC, opened an investigation into it and published a report about it in 2024, but further inquiry has been put on hold under the agency's new leadership.  State legislators have tried to outlaw algorithmic pricing as a privacy violation, an unfair competition matter, and on other grounds.  

So far, lobbying from the tech and retail industries has prevented widespread regulation of the practice.  Retailers generally say that they use profiling and algorithms to offer discounts (for example, a frequent flier might get a better price than a non-regular customer), and that curtailing the practice would actually hurt consumers.  This has been a successful line of argument.  Nevertheless, New York has just enacted an amendment to its unfair competition/consumer protection law that will require a “clear and conspicuous” disclosure of the use of “personalized algorithmic pricing” that uses personal data as part of the decision-making.   

WHY IT MATTERS

New York initially tried to pass a bill that would have regulated the use of algorithmic pricing.  That standalone bill was successfully lobbied against, and the compromise measure that merely requires disclosure was passed as part of an overall budget bill.  The New York law also prohibits use of “protected class” data to pursue discriminatory pricing.  It is likely that states will keep pursuing this practice in one way or another, and it is something to watch, for any company that uses personal data to set pricing.  

Meantime, any entity that sets personalized pricing – even if that pricing favors the consumer – should be aware that New York buyers are protected by this law.  This means that if your business advertises or sells in New York, you may be subject to the requirements of the law.  If your business offers algorithmic or personal pricing, this is a good time to ensure that your use of data is permissible/non-discriminatory, and that you know where and when to add the required disclaimer.  

The state AG has the power to investigate violations and issue small fines ($1,000) for them, but the law expressly keeps open the possibility of civil and criminal penalties for any authorized actions under the law.  It will take effect this summer.