Algorithmic pricing: US retailers challenge New York state law
The National Retail Federation (NRF) has filed a lawsuit in federal court to block the New York Algorithmic Pricing Disclosure Act. The act, scheduled to take effect on July 8, requires retailers to notify customers when a price has been calculated using an algorithm based on personal data.
In a July two complaint filed with the Manhattan federal court, the NRF said the legislation "interferes with retailers' ability to offer the best value and shopping experience to their customers." This statement is attributed to Stephanie Martz, the NRF's chief administrative officer and general counsel, in an official press release.
Algorithmic pricing disclosure act
Adopted in May as part of New York State's budget and signed by Governor Kathy Hochul, the law requires the following notice to be displayed: "This price has been set by an algorithm using your personal data."
The stated objective of the authorities is to combat the opacity of differentiated pricing. They argue this practice prevents consumers from comparing prices. As reported by FashionNetwork, the state is relying in part on a study by the Federal Trade Commission, published in January. This study highlighted the risks of algorithmic discrimination, suggesting some individuals may pay more for essential products based on their profile.
The NRF refutes this analysis and denounces it as "speculative fear". It believes that algorithms primarily optimise prices to the benefit of the customer. This is achieved by offering targeted promotions and personalised discounts. "Stigmatising the tools that lower prices turns promotional offers into a handicap," said Martz. "Consumers will end up paying more."
NRF claims act violates freedom of speech
The NRF is also challenging the law on constitutional grounds. It claims the act violates the First Amendment of the US Constitution by compelling retailers to express opinions they do not share — namely, that algorithmic pricing is harmful.
In its complaint, the NRF also highlights the arbitrary nature of the text, which contains numerous exemptions. It points out that personalised pricing techniques are not new. Retailers have been practising them for a long time, whether through loyalty cards, till coupons or seasonal adjustments. "Retailers are simply doing the same thing on the scale of the digital economy," the NRF explained.
Finally, the federation insists that no sensitive data is used. This data typically consists of postcodes, items viewed, or the contents of the shopping basket, shared voluntarily by the customer. Retailers nevertheless face a fine of 1,000 dollars per purchase if they do not comply with the new display requirement.
Symbolic fight for the future of personalised retail
The NRF believes this law threatens innovation in retail and creates an unwarranted climate of distrust. It points out that algorithmic pricing, by adjusting prices to demand and market conditions, often lowers prices overall. "Algorithmic mechanisms lower prices for consumers as a whole," the federation insisted in its complaint.
US retailers fear that New York's example will be followed in other states. The outcome of this litigation could therefore have an impact far beyond New York City alone.
About the National Retail Federation (NRF)
Based in Washington, the NRF is the leading advocacy organisation for the US retail industry. It represents an industry generating 5.3 trillion dollars in GDP and supporting more than 55 million jobs across the country. For over one hundred years, the NRF has championed retailers and promoted their economic and social role within communities.
New York algorithmic pricing disclosure act
Adopted as part of New York State's 2025 budget, the Algorithmic Pricing Disclosure Act aims to increase transparency around differentiated pricing based on personal data. It requires retailers to inform consumers whenever a price has been generated using an algorithm. The measure came into effect on July 8, 2025.
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