Attorney General James Warns New Yorkers About Algorithmic Pricing as New Law Takes Effect

NEW YORK – New York Attorney General Letitia James today issued a consumer alert warning New Yorkers about algorithmic pricing and encouraging them to report cases of companies using algorithmic pricing without properly disclosing it. 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 takes effect, requiring most companies that use algorithmic pricing to clearly display a disclosure notifying consumers that prices are set using their personal data. Attorney General James is urging New Yorkers who believe they have encountered algorithmic pricing that is not properly disclosed to file a complaint with the Office of the Attorney General (OAG).

“The law is clear: if businesses use algorithmic pricing, they must notify consumers,” said Attorney General James. “New Yorkers deserve to know whether their personal information is being used to set the prices they pay, and if businesses are charging customers different prices for the same products. I will not hesitate to take action against those who try to mislead New Yorkers and use their personal information to manipulate prices without their knowledge.”

Companies that deploy algorithmic pricing, also known as surveillance pricing, use customers’ personal data to set individualized prices. These pricing schemes are most commonly used on businesses’ apps or as part of loyalty programs, where consumers may receive an individualized discount offering a different, personalized price. Recent examples include customers being charged more for hotel rooms when booking from a high-income ZIP code and Target shoppers seeing prices increase when they browse online inside a Target store.

New Yorkers can use the following tips to determine if they are being offered personalized algorithmic pricing:

• Compare the price you are offered online with the price listed for the same product offered to others. If you are offered a unique price, it may have been set using your personal data.
• Compare discounts you are offered by a company – particularly those offered within a company’s app or online account – with those offered to others. If you are receiving a discount that only you can see, it is more likely to be a personalized one set using your data.
• Compare the price of an item before and after taking an action that the business you are shopping from can track. For example, if you are offered a new price after searching for an item elsewhere online or shopping from a new location, it may be a sign that the price is set using your personal data.

New York’s Algorithmic Pricing Disclosure Act requires most businesses to include a clear disclosure prominently displayed near prices stating, “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.” Attorney General James is encouraging consumers to file complaints with OAG if they encounter algorithmic pricing that is not properly disclosed. Businesses that do not comply with the law can face a $1,000 penalty per violation.