Businesses would be prohibited from using personal data to tailor prices to individual customers in New York under a newly passed bill meant to crack down on a practice critics have called “surveillance pricing.”
The state Assembly, however, declined to vote on companion legislation that would’ve also banned electronic price labels from the shelves of grocery stores and pharmacies, a measure pushed by labor unions who contend the technology can be used to instantly hike prices and reduce the stores’ workforce.
Grocery stores, business groups and delivery services including Instacart lobbied hard against the measures, arguing they will lead to price increases and could complicate customer loyalty programs. The stores dismissed concerns about the digital price tags, insisting they’re used only as a matter of technological convenience over the traditional method of changing shelf labels by hand.
But lawmakers decided to proceed with the ban on pricing using algorithms that use personal data to set different prices for different customers, with supporters arguing it can be used to squeeze more money out of consumers without them even realizing it.
The Legislature approved the bill late Thursday before ending their annual session. It will be up to Gov. Kathy Hochul whether to sign it into law.
“We're not trying to capture loyalty programs and legitimate discounts, etc.,” said state Senate Majority Leader Andrea Stewart-Cousins, a Yonkers Democrat. “But we are concerned about a practice that would just give different prices to different people based on — what? We're not sure.”
The bill banning “surveillance pricing” would apply to most businesses and service providers in New York, with some exceptions. It would not apply to insurance companies, while banks would still be able to assess a customer’s credit before offering terms for a loan or similar financial service.
“A price should be set based on supply, demand, what the market can bear — not your personal data,” said Assemblymember Emerita Torres, a Bronx Democrat who sponsored one of the bills. “That's what this bill is all about.”
The bill includes language meant to protect loyalty programs, such as a grocery store that offers rewards for returning customers. The protections apply when customers affirmatively enroll in the program and allow for discounts based on their past purchase history — provided no other personal data is used.
State Attorney General Letitia James’ office, a major supporter of the bills, says the protections ensure most loyalty programs can remain intact. James’ office would largely be in charge of enforcing the bills should they become law. A first violation would carry a fine of up to $5,000 plus restitution to customers; each subsequent violation would carry an up-to-$20,000 fine.
Business groups say the protections don’t go nearly far enough and could harm some loyalty programs because of how the bill is written. The legislation requires discounts to be offered “uniformly” to customers who are eligible.
Mike Durant, president and CEO of the Food Industry Alliance of NYS, said the bills need more “clarity and specificity.”
“Ultimately, our members … are hesitant, and they're saying the way the bill is crafted, they will not offer loyalty or reward programs anymore,” said Durant, whose group represents the state’s grocery stores.
The bills would allow “just for you” coupons based on items a family frequently purchases, according to a memo distributed to lawmakers by James’ office. They would not allow a discount, however, to entice a customer to complete a purchase after an item is placed in their cart.
Despite the Attorney General’s Office assurances, the Business Council — the state’s largest business lobby — contends the bills will effectively eliminate some discount programs.
“It’s important for the public to understand that these discounts are not disappearing because businesses chose to end them, but because the Legislature is banning them,” said Chelsea Lemon, the organization’s senior director of public affairs.
Assemblymember Torres said that’s “not true.”
Businesses “can offer legitimate discounts and the bill clearly allows it,” she said on X, the social-media platform. “What corporations can’t do is use your personal data to set prices or find your max price, then throw a ‘discount’ on it.”
Among the major supporters of the bills was the United Food and Commercial Workers International Union. In particular, the union pushed for the proposed ban on electronic shelf labels that failed to get an Assembly vote.
The small, digital displays — in use at large chains like Walmart and Aldi — show the price of the product on the shelf, replacing traditional printed price tags. The union argues the digital tags can be used to instantly change prices and potentially implement surveillance pricing — and that they put union members out of work.
“Electronic shelf labels are a tool for price gouging Americans – full stop – and tech companies market it as such repeatedly,” union vice president Ademola Oyefeso said in a statement.
But business groups say that’s not the case. Opponents of the ban parked a truck with a digital screen outside the state Capitol in recent days, using it as a billboard to liken traditional paper price tags to outdated things like carrier pigeons and a telegraph.
The Senate approved the digital price tag ban twice — once earlier this year, and again on Thursday after the bill was amended.
Senate Deputy Majority Leader Michael Gianaris, a Queens Democrat who sponsored the bill, said lawmakers were trying to regulate an emerging technology.
“This is a particularly dangerous one and a creepy one, where your personal data is being used to set a price specific to you,” he said Thursday “So I think most people, if they knew that was happening, would oppose it, and if they knew we had a chance to do something about it, would support what we're doing.”
Hochul has until the end of the year to sign or veto the pricing bill that passed.
