As algorithms quietly reshape the prices we pay online, New York is drawing a bold new line between personalization and privacy. On November 10, a first-of-its-kind state law took effect, requiring businesses operating in New York to disclose when they use consumers’ personal data to set prices. The Algorithmic Pricing Disclosure Act (“the Act”) marks one of the strongest state-level responses yet to the rise of algorithmic pricing – a practice that allows companies to dynamically adjust prices using personal data such as location, income level, or purchasing history.
Under the new law, any company using algorithmic pricing must display a conspicuous disclosure next to the relevant price, stating: “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.” Failure to provide the disclosure can trigger penalties of up to $1,000 per violation, without any cap on cumulative liability.
A New Frontier in Consumer Transparency
New York Attorney General Letitia James announced the law’s effective date with a consumer alert on November 5, urging New Yorkers to report undisclosed algorithmic pricing through the Attorney General’s online complaint system. “The law is clear: if businesses use algorithmic pricing, they must notify consumers,” James said. “New Yorkers deserve to know whether their personal information is being used to set the prices they pay.”
The alert followed months of public debate and legal scrutiny. Enforcement of the Act had been delayed pending a First Amendment challenge in the Southern District of New York. The court ultimately upheld the law, ruling that the compelled disclosure was “plainly factual” and not an unconstitutional restriction on commercial speech.
What the Law Covers
The Act applies broadly to companies domiciled in or doing business in New York that use personalized algorithms to set or promote prices to state consumers. It defines personalized algorithmic pricing as any dynamic pricing system using personal data, which includes data that “identifies or could reasonably be linked, directly or indirectly, with a specific consumer or device.”
Importantly, the law makes no distinction between data that consumers voluntarily provide and data inferred through tracking technologies. However, the legislation carves out several key exceptions. For-hire vehicle and transportation network companies using location data solely to calculate fares are excluded, as are regulated financial institutions and insurance entities. Subscription-based pricing models are also exempt.
Enforcement and Compliance
The New York Office of the Attorney General (OAG) is empowered to enforce the Act. The OAG can issue cease-and-desist letters based on consumer complaints or independent investigations and may seek injunctive relief for ongoing violations. Each undisclosed algorithmic price constitutes a separate violation, with penalties of $1,000 per instance. Notably, the statute does not require proof of individual consumer harm – a standard that lowers the threshold for enforcement actions.
THE BIGGER PICTURE: For consumers, the Act aims to expose the opaque mechanisms of so-called “surveillance pricing,” where algorithms exploit behavioral and demographic data to charge different consumers different prices. For businesses, it signals a shift toward algorithmic transparency and a reminder that digital personalization carries regulatory obligations. As the first law of its kind in the United States, New York’s Algorithmic Pricing Disclosure Act is expected to influence future state and federal policymaking on data-driven commerce, potentially setting the tone for a new era of transparency in automated pricing.
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