NY’s Algorithmic Pricing Law Under Fire

The National Retail Federation has asked a federal court to block a New York state law set to go into effect July 8 that requires retailers to disclose the use of “algorithmic” or variable pricing, saying the measure unfairly maligns a system that helps merchants give customers lower prices and personalized offers. The law was included in the state’s annual budget and signed into law by Gov. Kathy Hochul two months ago.

The NRF is seeking a temporary injunction to stop the law from going into effect on July 8 and a permanent injunction to stop it permanently. As of this posting, court records show that a judge had not taken any action on the NRF’s request, the Sourcing Journal reports.

 A press release released May 9 by Hochul’s office on the state’s budget included reasons for giving consumers notice of such so-called “surveillance pricing” via placards placed by merchandise using that system: “Such pricing practices… mean a company could be charging you and your neighbor different prices for the same product, based on your individual willingness to pay. This practice is opaque and strips consumers of their ability to comparison shop and plan for the price of goods and services.”

In its release about its lawsuit, the NRF countered that the new law “interferes with retailers’ ability to provide their customers with the highest value and best shopping experience they can,” said NRF Chief Administrative Officer and General Counsel Stephanie Martz said. “Algorithms are created by humans, not computers, and they are an extension of what retailers have done for decades, if not centuries, to use what they know about their customers to serve them better. It’s just done at the scale of the modern economy. Stigmatizing tools that drive prices down turns offering deals into a liability, and consumers will end up paying more.”

The NRF’s legal action is being widely watched in retail and consumer circles, as several other states are exploring the possibility of implementing such pricing-related disclosures.

Shop! will continue to cover this story as it unfolds.