On November 10, 2025, New York’s disclosure law on algorithmic pricing went into effect.  This post will describe the law, a recent federal court case, and some potential effects, using precise geolocation data as an example.

The law

The law, found at Section 349-a of New York’s General Business Law, applies to any entity domiciled or doing business in the state of New York.  The focus of the law is on entities that use personalized algorithms to set prices to a consumer for goods or services for personal, family, or household use, using that consumer’s own personal information, to advertise to a consumer in New York. 

The law defines “personal data” to be “any data that identifies or could reasonably be linked, directly or indirectly, with a specific consumer or device.”  “Personalized algorithmic pricing” means pricing that fluctuates dependent on conditions (“dynamic pricing”) set by a computational automated process that uses a set of rules to define a sequence of operations (an “algorithm”) that uses personal data.  An example would be if you were walking past a restaurant and received an email/text message offering you 10% off soup and a sandwich if you have lunch at the restaurant in the next 60 minutes.  The restaurant used your cell number/email address and your precise geolocation to send you the coupon.

New York’s law would require the restaurant to include a “clear and conspicuous disclosure” that reads:

THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.

The law defines “clear and conspicuous” to mean:  “disclosure in the same medium as, and provided on, at, or near and contemporaneous with every advertisement, display, image, offer or announcement of a price for which notice is required, using lettering and wording that is easily visible and understandable to the average consumer.”  The law applies not only to a direct price offer like the example, but also to any New York entity that “directly or indirectly, advertises, promotes, labels or publishes a statement, display, image, offer or announcement of personalized algorithmic pricing to a consumer in New York, using personal data specific to such consumer.”

The law also has some exceptions.

  • Location data used by for-hire vehicles.  The law excludes from the definition of personal data, location data that is used by a for-hire vehicle or a transportation network company vehicle that uses personal data “solely to calculate the fare based on mileage and trip duration between the passenger’s pickup and drop-off locations.”  We read this to exclude taxi and rideshare companies where location data is used to set trip pricing.
  • Anyone subject to New York’s insurance laws or regulation.
  • Certain financial institutions, subject to Gramm-Leach-Bliley or Section 801 of New York’s Financial Services Law.
  • “A price that is offered to a consumer who has an existing subscription-based contract or subscription-based agreement for goods or services with an entity and where such price is less than the price for the same good or service set forth in the subscription-based agreement or subscription-based contract.”

There is no private right of action—only the New York Attorney General can enforce it, seeking an injunction and up to $1,000 per violation. Violations are based on the failure to provide the disclosure, and there is no requirement to demonstrate individual harm or damages. 

The court challenge

New York’s law was challenged on First Amendment grounds, claiming that the required disclosure violated retailers’ First Amendment rights.  The Southern District of New York dismissed the challenge (National Retail Federation v. James, No. case 1 25-cv-05500-JSR (S.D.N.Y. Oct. 8, 2025).  Using the U.S. Supreme Court’s decision in Zauderer v. Office of Disciplinary Counsel, the court examined whether this commercial disclosure law violated the Constitution, based on whether it is “‘reasonably related to the state’s interest in preventing deception of consumers,’ and [is] not ‘unjustified or unduly burdensome.'” (quoting Zauderer, 471 U.S. 626, 651 (1985)).

The court found that the one-sentence disclosure required by the New York was factually accurate, and that the statement was not controversial.  The court ruled that “the disclosure required here serves to ameliorate ‘consumer confusion or deception’ by ensuring that consumers are better informed about how a merchant has set the displayed price, including the fact that the price may be different for different consumers.”  The court found that “the state’s interest in ensuring that consumers are informed about the terms on which products and services are offered to them is a cognizable interest under Zauderer.”

The court noted that the law did not require entities to use algorithmic pricing, but rather required the disclosure if any entity elected to do so.  Furthermore, because most of the advertising that would trigger the law was electronic, space considerations were not paramount.  In other words, the disclosure was not “unduly burdensome.”

Potential examples of covered activities

  • Company uses precise geolocation data associated with a user’s device to identify nearby store branches near them, and then, using this location data, offers them a promotion to shop at a specific store branch.
  • Company offers a holiday promotional sale nationwide, but lists higher prices or steeper discounts depending on the user’s zip code.
  • User is a member of a company loyalty program, where company texts the user to inform them of individualized discounts.
  • Company offers higher prices to users browsing their site using the latest iPhone or Android device, as compared to users of older devices.
  • Company offers higher discounts on an item to user whose browsing history or past purchase history indicates they are shopping for that item.

Our Take

Companies should be aware that a wide range of marketing activities may be covered by New York’s algorithmic pricing law.  For example, there is no distinction between whether the pricing is to the benefit of the consumer, or not, and so even personalized pricing to provide consumers with a discount that is to their benefit and lower than the default price would fall within the scope of this law, unless it is subject to the subscription-based agreement exception discussed above. 

The law also applies to a broad range of personal data, as any dynamic pricing that relies on data that “identifies or could reasonably be linked, directly or indirectly, with a specific consumer or device” falls under the law.  The inclusion of “consumer or device” is notable, as this appears to cover the use of personal information related to a specific user’s device, even if the specific consumer is not identified or identifiable, such as using device tracking technologies to track browsing and purchase behavior.

At the same time, certain industries, notably insurance companies, are excluded from the law, which is no surprise given insurers routinely rely on personal information like insured history (e.g. medical, driving) and location to set insurance prices.

We further emphasize that, as the Southern District of New York noted, the law does not prohibit algorithmic pricing, but only mandates the inclusion of a one-sentence disclosure if companies elect to use this tool to set pricing.  Given the broad potential scope of activities that may be covered by the law, we expect that many companies may choose to include this one-sentence disclosure in many of their electronic promotional and marketing activities directed to, or potentially directed to, consumers in New York, where there are close questions of whether the law would apply.