New York’s Algorithmic Pricing Disclosure Act – What It Means for Businesses and Consumers

Written by: Lee Merreot, Esq., CIPM, CIPP/US, CIPP/E, CDPO

What’s the News

On November 10, 2025, New York enacted the Algorithmic Pricing Disclosure Act, a groundbreaking law that requires businesses to disclose when prices are determined using algorithms informed by personal consumer data. This legislation is the first of its kind in the United States and aims to address growing concerns about transparency and fairness in pricing practices. The law mandates that businesses display a clear statement: “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.” The disclosure must be visible at the point of sale, whether online or in-store. Failure to comply can result in civil penalties of up to $1,000 per violation, enforced by the New York Attorney General’s Office. The law applies to a wide range of businesses, including e-commerce platforms, subscription services, and even brick-and-mortar retailers that use dynamic pricing algorithms.[1]

This development comes amid increasing scrutiny of algorithmic decision making in commerce. Algorithms have become integral to pricing strategies, allowing businesses to adjust prices based on demand, consumer behavior, and competitive factors. However, the lack of transparency has raised concerns about potential discrimination and exploitation. For example, consumers in certain zip codes or with specific browsing histories may unknowingly pay higher prices than others. The new law seeks to empower consumers by providing visibility into these practices and fostering accountability among businesses.[2]

Why It’s Relevant

The relevance of this law cannot be overstated. In an era where artificial intelligence and machine learning are increasingly driving critical business decisions, transparency is essential to maintaining consumer trust. Personalized pricing, while beneficial for businesses seeking to maximize revenue, can lead to ethical and legal challenges. For instance, if an algorithm charges higher prices based on socioeconomic indicators, it could constitute discriminatory pricing, exposing businesses to lawsuits and reputational damage.

For businesses operating in multiple states, this law signals a trend toward increased regulation of algorithmic practices. Companies must now consider compliance not only with numerous data privacy laws but also with emerging AI governance frameworks. Failure to adapt could result in financial penalties, legal costs, and the loss of consumer confidence.

Consumer Concerns

Consumers have long been wary of how their personal data is used, and this law brings those concerns to the forefront. Key issues include fairness, privacy, and transparency. Fairness relates to whether consumers are being charged equitable prices regardless of their demographic or behavioral data. Privacy concerns stem from the extent to which personal information—such as location, purchase history, and even device type—is leveraged to set prices. Transparency is critical because, even with disclosure, consumers may not fully understand how algorithms influence pricing.

These concerns are amplified by the complexity of algorithmic systems. Most consumers lack the technical knowledge to interpret algorithmic processes, making it difficult to assess whether pricing practices are fair. This information asymmetry creates a power imbalance between businesses and consumers, which regulators aim to at least partially address through disclosure requirements.

Emerging Trends

The Algorithmic Pricing Disclosure Act is part of a broader trend toward regulating AI-driven decision making. Several states, including California and Illinois, are considering similar legislation. At the federal level, bills such as the “End Rent Fixing Act” indicate growing interest in curbing algorithmic practices that harm consumers.[3] Internationally, the European Union’s AI Act includes provisions for transparency in automated systems, setting a global precedent.[4]

Similar to data privacy regulations in the United States, businesses should anticipate a patchwork of state laws governing algorithmic pricing, creating significant compliance challenges. Additionally, regulators are likely to demand greater explainability in AI systems, requiring companies to document and justify their pricing algorithms. This trend underscores the need for robust AI governance frameworks that prioritize fairness, accountability, and transparency.[5]

How Businesses Can Protect Themselves

To mitigate risks, businesses should take proactive steps to ensure compliance with the new law and prepare for future regulations. First, conduct comprehensive audits of pricing algorithms to identify potential biases and ensure transparency. Second, implement clear communication strategies that explain pricing practices to consumers in plain language. Third, establish internal AI governance policies that align with ethical standards and regulatory requirements.

Businesses should also monitor legislative developments across states and at the federal level. Engaging legal counsel and compliance experts can help organizations navigate the evolving regulatory landscape. Finally, be sure to implement privacy-by-design principles to minimize data collection and reduce reliance on sensitive information for pricing decisions.

What Can Consumers Do

Consumers can take several steps to protect themselves in this new environment. First, pay attention to disclosures on websites and apps, which indicate when prices are algorithmically determined. Second, compare prices across devices and accounts to identify potential discrepancies. Third, report violations to the New York Attorney General’s Office or relevant consumer protection agencies.

Additionally, consumers should educate themselves about how personal data influences pricing and consider using privacy tools, such as browser extensions that block tracking. By staying informed and vigilant, consumers can reduce the risk of exploitation and advocate for fair pricing practices.

The Beckage Firm’s Role

At The Beckage Firm, we specialize in helping businesses navigate complex regulatory environments related to data privacy, cybersecurity, and AI governance. Our services include compliance audits to ensure algorithmic practices meet disclosure and fairness standards, policy development to establish robust AI governance frameworks, and litigation support for businesses facing enforcement actions or consumer claims.

We also provide training programs to educate employees on ethical AI practices and regulatory compliance. By partnering with The Beckage Firm, businesses can stay ahead of emerging trends and build consumer trust through transparency and accountability.

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References

[1] New York State Senate, “Algorithmic Pricing Disclosure Act,” New York State Senate (Nov 10, 2025), https://www.nysenate.gov/legislation/bills/2025/S7600.;
[2] “New York Passes Algorithmic Pricing Disclosure Act”, TechLaw Today (Nov 10, 2025), https://www.techlawtoday.com/article/algorithmic-pricing-disclosure-act.;
[3] U.S. Congress, “H.R.6124 – End Rent Fixing Act of 2025,” Congress.gov (Nov 19, 2025), Text – H.R.6124 – 119th Congress (2025-2026): End Rent Fixing Act of 2025 | Congress.gov | Library of Congress.;
[4] “AI Act”, European Commission (Last Updated Dec 5, 2025), AI Act | Shaping Europe’s digital future.;
[5] Anita C. Marinelli, and Kimberly L. Scott, ” Pricing Algorithms – Price Tags and Personal and Competitor Data- States Step Up Algorithmic Pricing Regulation”, The National Law Review (Nov 25, 2025), Recent State Algorithmic Pricing Regulations.;