New York City Passes Ban on Surveillance Pricing

“Some companies use your personal data, like browsing history, to serve different prices to different customers. It’s called surveillance pricing, and we just banned it in New York City,” Mayor Zohran Mamdani said in a post on X.com.

The New York City Council passed the legislation with a 44-5 vote on Thursday, making the city the second in the United States to prohibit the practice. The new law, which will take effect in 120 days, targets algorithmic pricing models that use consumer data to adjust costs for identical goods or services.

This move places New York City alongside Seattle, which was the first U.S. city to issue a similar ban. While the city moves forward, a broader legislative trend is emerging across the country; Maryland, Connecticut, and New Jersey have already passed similar restrictions, and the Federal Trade Commission is currently investigating the issue.

The city’s new ordinance defines surveillance pricing as any price set, entirely or partially, by an algorithm that uses personal data to offer varying prices to different customers for the same items.

The law does not eliminate all forms of price variation. It explicitly permits “bona fide discounts” and “rewards that are legitimate and transparent,” Supermarket News reported. These exceptions include buy-one-get-one-free deals, established loyalty programs, and discounts for specific groups such as students, teachers, senior citizens, veterans, and active military members.

To ensure compliance, the NYC Department of Consumer and Worker Protection has been granted the authority to investigate consumer complaints. Violations can result in fines of up to $1,000 for each instance. However, the legislation includes a provision for small businesses, allowing them to avoid these penalties if they address any violations promptly.

The legislative path in New York has been complex. Although the New York state legislature voted in favor of a ban earlier this year, Governor Kathy Hochul has not yet signed the state-level measure into law.

Watch New York City Council's Stated Meeting on Surveillance Pricing and Other Legislation — New York City Council

Retail advocacy groups have resisted the ban. Industry representatives argue that targeting algorithmic pricing ignores the fundamental drivers of inflation and consumer costs.

Michael Durant, president and CEO of the Food Industry Alliance of New York State, expressed concern that the local mandate might be premature or even harmful to the economy.

New York City Passes Ban on Surveillance Pricing

“Frankly, this legislation does not address the issue of affordability, it worsens it,” Durant told Supermarket News.

Durant also questioned the necessity of the city’s independent action, noting the friction between local and state-level efforts. He pointed out that the city’s ordinance differs from the proposed state law by offering a leniency clause for small retailers regarding penalties.

“The bills are similar but, we question why New York City needed to move this bill when the statewide bill is actively being discussed,” Durant said.

As the 120-day countdown to enforcement begins, the debate continues over whether these protections safeguard consumer privacy or inadvertently restrict the tools retailers use to manage thin margins in an era of rising costs.

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