On May 9, 2025 New York Governor Kathy Hochul signed the Algorithmic Pricing Disclosure Act (the “Act”) into law. This is the first time that a state jurisdiction has mandated use of certain disclosures if consumer data has been utilized to dynamically set pricing for products and services. As our readers are aware, the use of artificial intelligence (“AI”) in marketing is already highly regulated. States are now turning their attention to AI usage in broader areas of commerce. Although the Act does not specifically mention AI, it is intended to protect State consumers from deceptive business practices employing the same or similar functionality.
The Act is detailed in Part X of the massive Transportation, Economic Development and Environmental Conservation Bill (the “TED Bill”). New York State’s new dynamic pricing disclosure requirements took effect on July 8, 2025.
Key Aspects of the Dynamic Pricing Law
The primary upshot of the Act is that businesses must clearly and conspicuously post a disclosure, which states: “This price was set by an algorithm using your personal data,” if data specific to a particular individual was utilized in setting pricing. Failure to prominently provide such disclosure constitutes a deceptive act or practice under New York State law.
The Act specifically defines the following key terms:
- Personalized algorithmic pricing: dynamic pricing derived from or set by an algorithm that uses consumer data;
- Dynamic pricing: pricing that fluctuates dependent on conditions;
- Consumer data: any data that identifies or could reasonably link, directly or indirectly, to a specific natural person or device, excluding location data; and
- Protected class data: information that identifies a characteristic that is legally protected from discrimination under state or federal law, including but not limited to ethnicity, national origin, age, disability, sex, sexual orientation, gender identity and expression, pregnancy outcomes and reproductive health.
Why Is Dynamic Pricing Law Compliance Important?
The Act authorizes the New York Attorney General to bring suit against any business accused of not adequately disclosing the use of algorithmic dynamic pricing. Businesses that violate the Act face injunctive remedies and thousands of dollars in penalties per violation. Importantly, the Act creates a private right of action for individuals whose protected class data was used to: 1) withhold or deny any of the accommodations, advantages, and/or privileges afforded to others; or 2) present a different price offer, if based in part or in whole upon this protected class data.
As stated, New York’s algorithmic pricing disclosure requirements are now in effect. Companies that algorithmically price their products and services should consult with legal counsel to ensure that their practices comport with relevant State provisions.
The attorneys at Klein Moynihan Turco have decades of experience in guiding companies through emerging legal landscapes. Please email us at info@kleinmoynihan.com or call us at (212) 246-0900 if you would like assistance with complying with the Act or other state and federal marketing laws.
The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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Photo by Sean Pollock on Unsplash
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