New York Seeks to Regulate Personalized Pricing with New Law

New York has introduced a proposed law aimed at restricting companies from employing artificial intelligence and customer data to establish personalized pricing during major retail events, including Black Friday. The legislation mandates retailers using such pricing strategies to disclose that “This price was set by an algorithm using your personal data.” This move reflects a growing concern in New York about the ethical use of customer data in marketing and pricing strategies.

The law has drawn mixed reactions from stakeholders. Businesses argue that it could lead to confusion due to its broad language. The National Retail Federation attempted to challenge the rule earlier in 2025, citing potential infringements on First Amendment rights, but a federal judge dismissed their claims. On the other hand, consumer rights groups argue that the legislation does not go far enough, advocating for a complete ban on personalized pricing practices.

Concerns Over Data Usage and Marketing Practices

As the conversation surrounding personalized pricing intensifies, states like California and Washington are contemplating similar regulations. The former chair of the Federal Trade Commission, Lina Khan, expressed concerns about the widespread adoption of personalized pricing and artificial intelligence in marketing. She noted that such practices are likely to expand beyond seasonal sales events, underscoring the urgency of New York’s proposed legislation. “This new law shines the light on hidden online pricing tactics that take advantage of consumers,” said Kathy Hochul, the Governor of New York, in a press release.

Personalized pricing leverages data from customer shopping habits to tailor prices for individual consumers. For instance, a shopper who recently purchased luxury items may encounter higher prices for supplementary products, while a more budget-conscious buyer might see lower prices. According to the Federal Trade Commission, retailers can gather extensive information, including demographic details and even tracking mouse movements on their websites. This data is used not only to promote specific products but also to emphasize higher-priced options.

In a notable case, Delta announced in August 2025 that it had adopted personalized pricing for its flights, offering varying prices for the same flight based on the customer’s search history. While specific instances of personalized pricing are challenging to quantify, Justin Kloczko, a researcher with the consumer protection nonprofit Consumer Watchdog, shared his personal experience. He found that both Uber and Lyft quoted him higher fares compared to those offered to his wife, who requested rides simultaneously.

Potential Solutions for Consumers

As New York moves forward with this legislation, consumers are exploring ways to navigate the complexities of personalized pricing. One suggested method is to use cash for in-person purchases, which can help avoid leaving a digital footprint. Additionally, clearing browser caches and utilizing virtual private networks (VPNs) may assist shoppers in masking their online identity and potentially accessing lower prices.

With the ongoing discussions surrounding personalized pricing, New York’s proposed law highlights a significant shift in the landscape of consumer rights and data privacy. As businesses and advocacy groups continue to debate the implications of this legislation, it is clear that the conversation around the ethical use of customer data is far from over.