New York State recently enacted a law requiring companies doing business in New York to disclose when they use an algorithm based on an individual consumer’s personal data to set pricing for a good or service advertised or sold to that consumer. That practice, also known as “surveillance pricing,” enables companies to automatically adjust prices based on personal information such as an individual consumer’s location or his or her shopping habits, which could have the effect of charging some consumers prices that are higher than the prices other consumers are being charged for the same goods or services. New York’s Algorithmic Pricing Disclosure Act, which took effect on November 10, 2025, is the first state law of its kind and requires that any use of algorithmic pricing by an entity domiciled in or doing business in New York be accompanied by a “clear and conspicuous disclosure” that alerts consumers that their private data is being used for the purpose of setting a price.
According to a consumer alert issued by the New York State Attorney General’s Office in anticipation of the effective date of the statute, algorithmic pricing schemes are commonly encountered on businesses’ own apps or as a part of a company’s loyalty program, where consumers are likely to receive customized pricing in connection with a purported discount. Algorithmic pricing can also occur based on a consumer’s browsing history or physical location. For example, a consumer may be charged a higher price when reserving a hotel room based on the zip code where the consumer is located when making the reservation (if the zip code is considered a “high-income” location).
To satisfy the statute’s disclosure requirement, any use of algorithmic pricing based on a consumer’s specific personal information must include the statement “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.” The statute does, however, identify several entities that are exempt from the disclosure requirement, including financial institutions that are otherwise regulated under the Gramm Leach Bliley Act or Section 801(f) of New York’s Financial Services Law and companies regulated under New York State’s insurance laws. Also carved out from the statute’s definition of “personal data” is any data used by a for-hire vehicle service as defined under Section 19-502 of New York City’s Administrative Code or a “transportation network company” as defined in New York’s Vehicle and Traffic Law § 1691.
In the same consumer alert notifying New Yorkers about the new law, the New York Attorney General’s Office encouraged consumers to file complaints with its office if they encounter algorithmic pricing that has not been properly disclosed. Should the AG’s Office believe that a violation is occurring, it shall issue a cease-and-desist letter to the offending entity. If the conduct continues, the AG’s Office may seek a special proceeding to issue an injunction against the continuance of that conduct. And if that further injunction is ignored, a judicial determination may be made whereby a civil penalty of up to $1,000 for each violation of the statute may be assessed, regardless of whether a consumer has demonstrated any actual injury or damages.
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