A US federal judge has dismissed a lawsuit brought by the National Retail Federation (NRF) against New York’s Algorithmic Pricing Disclosure Act, a first-in-the-nation “surveillance pricing” law requiring retailers to tell customers when personal data help set prices.
Judge Jed Rakoff ruled the trade group failed to show the disclosure requirement violates free-speech protections, saying the measure reasonably serves the state’s interest in ensuring consumers understand how prices are determined.
What the ruling means for retailers
The decision clears the way for New York to enforce the transparency rule, which mandates a clear, capital-letter notice when prices are generated by algorithms using personal data—sometimes described as dynamic pricing or personalised pricing.
Civil fines of up to $1,000 per violation can apply. New York Attorney General Letitia James, whose office defended the statute, has agreed not to apply it retroactively for the period the law was on hold during the case.
The NRF argued the requirement was compelled speech and painted algorithms as “dangerous,” contending that retailers also use them for loyalty discounts and promotions.
Rakoff rejected those arguments in a 28-page opinion, writing that the disclosure helps prevent consumer confusion about how a displayed price was set.
How New York’s algorithmic pricing disclosure act works
Signed in May 2025 and effective from 8 July 2025, the law requires any business that uses algorithmic pricing based on personal data to place a conspicuous disclosure next to the price.
Legal briefs and client advisories describe the statute as the first of its kind in the United States and outline the required wording and placement of the notice.
Enforcement was temporarily stayed while the NRF’s lawsuit proceeded but can now resume.
Governor Kathy Hochul has said the law targets opaque price personalisation that can hinder comparison shopping, while the state maintains the disclosure is a narrow transparency tool rather than a ban on algorithmic or dynamic pricing.
National context and next steps
The ruling arrives amid heightened scrutiny of “surveillance pricing,” where retailers tailor prices using data such as location, browsing history and device identifiers.
In January, the US Federal Trade Commission (FTC) released initial staff findings highlighting the breadth of personal data used to set individualised prices; then-Commissioner (now Chair) Andrew Ferguson dissented from issuing the summaries, calling the release rushed.
Industry lawyers note New York’s approach could become a template for other states weighing algorithmic pricing transparency or price discrimination rules.
Separate proposals in Albany have also addressed discriminatory pricing based on inferred characteristics.
Retailers operating nationally may now reassess pricing algorithms and customer notices to comply with New York’s disclosure obligations while monitoring potential copycat measures elsewhere.
“Court rejects retailers’ bid to block New York surveillance pricing law” was originally created and published by Retail Insight Network, a GlobalData owned brand.
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