Think The Algorithm Set A High Price Just For You? New State Law Might Help

NEW YORK — Ever suspect that you're paying a higher price than others for the same exact thing? If that higher price was set by an algorithm based on your personal information, it could be against the law in New York.

New York Attorney General Letitia James issued a consumer alert warning New Yorkers about algorithmic pricing and encouraging them to report cases of companies using the technology without properly disclosing it.

Algorithmic pricing, also known as "dynamic pricing," or "surveillance pricing," lets businesses automatically adjust prices based on the consumer's individual personal data, charging some consumers more than others depending on factors like their location, income, and previous shopping habits, according to the AG.

On Nov. 10, New York's Algorithmic Pricing Disclosure Act goes into effect, requiring most companies that use algorithmic pricing to clearly display a disclosure notifying consumers that prices are set using their personal data.

"The law is clear: if businesses use algorithmic pricing, they must notify consumers," James said. "New Yorkers deserve to know whether their personal information is being used to set the prices they pay, and if businesses are charging customers different prices for the same products. I will not hesitate to take action against those who try to mislead New Yorkers and use their personal information to manipulate prices without their knowledge.

Algorithmic pricing is most commonly used in businesses' apps or as part of loyalty programs, where consumers may receive an individualized discount offering a different, personalized price. Recent examples include customers being charged more for hotel rooms when booking from a high-income ZIP code and Target shoppers seeing prices increase when they browse online inside a Target store, the AG said.

The AG's office said there are a few easy ways to tell if your data is being used to set prices — compare, compare, compare.

• Compare the price you are offered online with the price listed for the same product offered to others. If you are offered a unique price, it may have been set using your personal data.
• Compare discounts you are offered by a company, especially those offered within a company's app or online account, with those offered to others. If you are receiving a discount that only you can see, it is more likely to be a personalized one set using your data.
• Compare the price of an item before and after taking an action that the business you are shopping from can track. For example, if you are offered a new price after searching for an item elsewhere online or shopping from a new location, it may be a sign that the price is set using your personal data.

AG James is urging New Yorkers who believe they have encountered algorithmic pricing that was not properly disclosed to file a complaint with the Office of the Attorney General (OAG). Businesses that do not comply with the law can face a $1,000 penalty per violation.