New York Attorney General Letitia James has issued a consumer alert to inform residents about the use of algorithmic pricing as a new state law comes into effect. The Algorithmic Pricing Disclosure Act, which takes effect on November 10, requires most companies that use algorithmic pricing to clearly disclose this practice to consumers.
Algorithmic pricing allows businesses to automatically adjust prices based on personal data such as location, income, and shopping history. This can result in different customers being charged varying amounts for the same product or service. Examples include higher hotel room rates for individuals booking from high-income ZIP codes and changes in online prices when shoppers are inside certain retail stores.
Attorney General James stated, “The law is clear: if businesses use algorithmic pricing, they must notify consumers. 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.”
The law mandates that companies using algorithmic pricing display a disclosure near prices stating, “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.” Businesses failing to comply may face penalties of $1,000 per violation.
To help consumers identify personalized pricing, the Office of the Attorney General recommends comparing offered prices with those given to others for the same item, reviewing discounts available through company apps or accounts versus those available more broadly, and noting any price changes after taking actions like searching elsewhere online or shopping from a new location.
Attorney General James encourages anyone who suspects undisclosed algorithmic pricing practices to file a complaint with her office.
