According to CNET, a new consumer protection law took effect in early November in New York, requiring online retailers to warn shoppers when prices are set by algorithms using personal data. During Black Friday sales, shoppers began seeing messages stating, “This price was set by an algorithm using your personal data.” The law, with exceptions for rideshare apps, mandates disclosure when companies use “surveillance pricing,” a practice that can raise or lower costs based on individual data points like device type, browsing history, and location. Business groups have already sued in federal court to block the law, arguing it violates First Amendment rights. It’s also unclear if companies are fully complying, as some are reportedly tucking the warning behind hard-to-spot information icons.
What’s actually in the algorithm?
So, what data are they using? It’s not just simple surge pricing. We’re talking about algorithms that calculate costs based on you—or at least, the digital profile of you. That means whether you’re on an iPhone or an Android, what you’ve been browsing, what you’ve bought before, and crucially, where you live. There have been reports of things like eggs costing more in wealthy zip codes. But it can get way more complex. Some systems analyze millions of purchases to predict what you’re willing to pay. It’s personalized pricing on a massive, automated scale. The real question is: if the algorithm gives you a lower price than your neighbor, do you even care about the transparency?
An uphill battle for regulation
Here’s the thing: New York’s law doesn’t ban the practice. It just forces companies to tell you they’re doing it. And even that level of transparency was enough to trigger an immediate lawsuit from business groups. That tells you everything about how fiercely this will be defended. New York isn’t alone—states like California, Colorado, and Illinois are working on similar rules. But the pushback is intense. Look at California: their proposed ban got gutted in September. The current version only applies to grocery prices, which is almost irrelevant for online shopping. It shows how hard it is to regulate this stuff when every online industry is fighting it. You can read the text of the New York law, General Business Law § 349-A, and the details of the lawsuit from the National Retail Federation here.
The bigger privacy picture
I think the most interesting long-term effect might not be on pricing, but on privacy awareness. Once you see a label saying your personal data was used to set a price, you start to wonder. What else is this data being used for? Who else has it? The warning is a tiny window into a vast data-harvesting operation. It makes the abstract concept of “data collection” very concrete. Basically, it turns you from a passive shopper into someone who might actually question the entire tracking ecosystem. That could have a far bigger impact than any single price tag. For more on how these legislative battles are playing out, the saga of California’s bill is detailed here.
Where do we go from here?
So where does this leave us? In a weird limbo. The law is active, but being challenged. Companies might be complying, but maybe not in the spirit of the law. And shoppers are getting a glimpse behind the curtain, but it’s a confusing one. Will this transparency make people change their buying habits? Maybe, maybe not. But it absolutely puts the practice on the public radar. And in the world of tech regulation, that’s often the first, hardest step. Now we wait to see if other states follow New York’s lead or if the courts shut it down. Either way, the cat’s out of the bag. People know their data is setting their price.
