Retailers Appeal NY's Algorithmic Pricing Disclosure Mandate
Retailers have appealed the constitutionality of New York's algorithmic pricing disclosure law.
Why it matters: This case raises key issues about transparency and consumer privacy in data-driven pricing, relevant for legal advisors managing compliance and risk in retail technology.
- New York's Algorithmic Pricing Disclosure Act took effect on November 10, 2025, mandating a consumer warning on algorithmically set prices.
- The National Retail Federation sued, claiming the required disclosure is misleading and violates the First Amendment.
- A district court upheld the law, but NRF appealed to the Second Circuit arguing the warning lacks clarity on 'personal data.'
- Amicus briefs from the U.S. Chamber of Commerce and EPIC support opposing positions on economic impact and consumer transparency.
New York’s Algorithmic Pricing Disclosure Act went into effect on November 10, 2025. It requires retailers using algorithms that adjust prices based on consumers’ personal data to display a label stating: "THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA."
The National Retail Federation (NRF) challenged this law, filing suit on July 2, 2025. They argue that the disclosure is misleading and compels speech that distorts lawful pricing practices. NRF’s attorney David M. Gossett described the label as "literally true but misleading" because it fails to clarify what "personal data" means.
U.S. District Judge Jed Rakoff dismissed the lawsuit on October 8, 2025, ruling the labeling requirement "purely factual" and constitutional (Loeb & Loeb). NRF has appealed the dismissal to the Second Circuit, where oral arguments were heard on October 19, 2026 (Bloomberg Law).
New York Attorney General Letitia James defends the measure, noting it helps raise awareness that prices may vary based on personal data. She cited concerns over consumers feeling "cheated" and the potential impact on costs amid rising grocery prices (NY AG press release).
The law also empowers the Attorney General to seek injunctions and impose civil penalties of up to $1,000 per violation (Jones Day).
Amicus briefs illustrate the divide: the U.S. Chamber of Commerce warns the mandated label could falsely suggest improper pricing, harming businesses and consumers (MediaPost). Conversely, the Electronic Privacy Information Center supports the law, emphasizing the need for transparency in "surveillance pricing" (EPIC).
By the numbers:
- $1,000 — Maximum civil penalty per violation under the NY law
- 23% — Higher prices charged to some Instacart users for identical products
- July 2, 2025 — NRF filed the initial lawsuit challenging the law
Yes, but: The Second Circuit has not yet ruled, leaving uncertain whether the mandated disclosure will survive judicial scrutiny or face modification for clarity.
What's next: A decision from the Second Circuit is pending following October 2026 oral arguments, potentially shaping future algorithmic pricing transparency laws.