State AG Letitia James pushes ban on surveillance pricing

State Attorney General Letitia James is once again trying to strengthen consumer protections in New York. She’s pushing for nation-leading legislation that would make so-called “surveillance pricing” illegal in the state, building on a law approved last year that requires companies to disclose when the practice is used. 

James rallied with lawmakers and advocates in Albany on Monday for a package of two bills to address the issue of surveillance pricing. Also known as algorithmic pricing, the practice is used by companies to tailor prices to individual consumers based on collected data, meaning that some people pay more for the same product based on personal information. “Too often, this means we’re paying more for the basics that we need to get by,” James said. “This is not innovation, this is exploitation.”

Legislators have introduced two bills to stop the practice: the One Fair Price Act and the Protecting Consumers and Jobs from Discriminatory Pricing Act. The first, sponsored by state Sen. Rachel May and Assembly Member Emérita Torres, would completely outlaw surveillance pricing when shopping online or through apps. The latter, sponsored by state Sen. Mike Gianaris and Assembly Member Michaelle Solages, takes aim at practices used at brick-and-mortar stores by banning electronic shelf labels and the use of algorithmic pricing at grocery stores and supermarkets. 

May said the broad use of price tags was a welcome development, since it ensured all consumers know what they will be asked to pay, and how much others are paying as well. But advancements in technology have changed the calculus and made shopping far less transparent. “In a world where every New Yorker is relentlessly tracked for every piece of personal and consumer data, algorithms can be created to tailor prices to individual behaviors," May said. This could allow companies to figure out the maximum price someone would pay for that item. “This throws the whole concept of fair pricing and a fair economy out the window.”

Both bills go much farther than the law Gov. Kathy Hochul signed last year, which simply requires companies to disclose when they make use of algorithmic prices when someone shops. At the time, it was the first law of its kind in the nation, and not much has changed around the country since then. California is one of the only other states that has taken action to curb the practice, with the attorney general in the state launching a series of investigations in January under the California Consumer Privacy Act.

Hochul has not weighed in on the new bills or the prospect of banning surveillance pricing outright. But if history is any indication, one part of the proposals may pose an issue if they make their way to the governor’s desk. In addition to granting enforcement power to the attorney general, the bills would also create a private right to action, allowing consumers to sue companies that violate the law to their detriment. During negotiations with the governor on other measures, similar private rights to action have been dropped in the final agreement.

One such example is the FAIR Business Practices Act, which James also championed. When Hochul signed the law last year, she included a chapter amendment limiting the scope of when a private citizen could sue. The final version of the SAFE for Kids Act also had the private right to sue removed.

“Obviously, a private right of action is critical to all consumers,” James told reporters, though she added she would leave the “legislative process” up to the lawmakers. “But clearly, the Office of the Attorney General will file proceedings to protect the interests of consumers,” she said.

Surveillance pricing represents the intersection of two particularly thorny issues: consumer protection and data privacy. Deep-pocketed business interests generally lobby hard against measures that may hurt their bottom lines. Laws to protect data privacy also face strong headwinds from the powerful tech industry, in addition to the businesses that would no longer be able to use personal data. That has made broader data privacy laws and regulations for AI more difficult to pass.