AG James, Dems Want to Ban Prices Based on Personal Algorithms

New York Public News Network | By Jon Campbell

New York Attorney General Letitia James is throwing her support behind state legislation to curtail retailers and grocers from setting prices using algorithms based on personal data.

James, a Democrat, held a news conference Monday at the state Capitol in Albany to push for a pair of bills that would effectively ban the practice, including one that would also prohibit grocery stores and pharmacies from using digital price tags that can instantly change prices in real time. She called it an expanding, exploitative practice that forces consumers to pay more.

She said customers should pay the same price for the same items, regardless of their spending habits or personal backgrounds. But business and tech groups are pushing back, arguing the bills could threaten e-coupons and loyalty programs even though they contain language meant to protect them.

“ We are seeing online retailers that charge first-time parents more for baby products simply because the retailers know that the new parents are likely to pay more,” James said. “We are seeing seniors getting upcharged while ordering groceries on the same day that they receive their benefits.”

These pricing tactics are happening online, where companies may rely on personal data to set prices, or in person, where digital displays can easily be adjusted in a way that critics fear could lead to surge pricing.

James’ push with Democratic lawmakers comes less than a year after Gov. Kathy Hochul signed a bill into law requiring companies to disclose when they use personalized algorithmic pricing to set the price of any goods or services.

That bill took effect in November. But James and other supporters of the legislation — including labor unions representing grocery and retail workers who say algorithmic pricing is putting workers out of jobs — say it’s already clear the process needs to be banned.

One bill, sponsored by Democratic Assemblymember Emerita Torres of the Bronx and Sen. Rachel May of the Syracuse area, would ban algorithmic pricing outright, as well as prohibit stores from collecting personal data “for the purpose of facilitating surveillance pricing.” It would apply to any entity doing business in New York, including online retailers selling to residents of the state.

It includes an exception for insurance companies and financial institutions, as well as for sales and discount programs that are “offered equally to all consumers, regardless of personal data.” They would allow loyalty programs so long as participation is voluntary and everyone receives the same discounts, and that prices aren’t based on personal data collected outside the loyalty program.

The second bill, sponsored by Sen. Michael Gianaris and Assemblymember Michaelle Solages of Long Island, would apply specifically to grocery stores and pharmacies.

It would prohibit them from using personalized pricing, as well as from using digital price tags that allow them to change prices based on an algorithm or computer program. It also includes an exception meant to allow for loyalty programs.

Trade groups representing businesses and tech companies are lobbying against the measures.

Chelsea Lemon, senior director of government affairs for The Business Council, the state’s largest business lobby, said stores have long provided discounts based on past purchases or participation in rewards programs.

“These bills threaten to take away those discounts and put more strain on New Yorkers dealing with an affordability crisis,” she said.

Chamber of Progress, a wide-ranging trade group representing tech giants including Amazon and Apple, has circulated a memo to lawmakers arguing that differential pricing is often beneficial to consumers. It also claims a measure in the bills allowing individuals to sue over violations of the law would create a huge litigation risk for businesses.

Torres said her bill would sufficiently protect loyalty programs. She said lawmakers added the language protecting the programs after retailers pushed back to the algorithmic pricing disclosure bill before Hochul signed it into law last year.

“We are not banning sales, we’re not banning discounts that are publicly disclosed for everyone,” she said. “We’ve addressed those issues in the new bill and in the package.”

New York’s legislative session continues into early June.

Image: New York State Attorney General Letitia James (New York State Attorney General/File)