The state of New York has implemented the first law in the USA that specifically regulates the use of Artificial Intelligence (IA) to establish personalized pricing for online shopping.
This regulation requires retailers to clearly and visibly inform consumers when a price has been adjusted by algorithms that use personal data. The law took effect in November 2025 and applies to all major retailers that sell products or services to residents of the state.
It focuses on the practice known as «surveillance pricing», where the final price for the user is determined based on their digital profile. Implementation requires companies to adapt their digital platforms to display the mandatory notification.
READ MORE: TIME Names the “Architects of AI” as 2025 Person of the Year
Context and need for regulation
The creation of this law responds to the growing and widespread use of AI and advanced algorithms in e-commerce. Companies use these systems to analyze data such as consumers’ browsing history, location, and previous purchasing behavior.
With this information, algorithms can adjust prices dynamically and in a personalized way for each user. This practice, although common, lacked any type of regulatory transparency at the state or federal level until now.
Two consumers could pay different amounts for the same product without being aware that their digital profile was the determining factor. The opacity of these mechanisms raised concern among consumer advocates, who highlighted the potential for abuse and the erosion of trust in the digital marketplace.
READ MORE: Christmas controversy: White House presents Santa Claus’s “blacklist” for journalists over fake news
AI law for online shopping takes effect in New York: Benefits
The new New York law does not prohibit the practice of dynamic pricing, but it establishes a strict transparency requirement for online shopping. It requires any company that uses algorithms to personalize prices to clearly display the following statement next to the affected price:
«This price was established by an algorithm using your personal data».
This obligation applies to all platforms operating with consumers in the state. The main benefit is empowering consumers with critical information at the moment of purchase decision.
The regulation allows New Yorkers to know when their personal data is being used to set a price, which contributes to greater fairness in digital commerce. By shedding light on these tactics, the law seeks to protect citizens’ purchasing power and foster trust in the market. The goal is to ensure consumers can make informed decisions with full knowledge of the factors determining the cost of a product or service.
READ MORE: California Ends Masked Enforcement Operations Under New Transparency Law
Support from governor Kathy Hochul
The Governor of New York, Kathy Hochul, has publicly endorsed this legislation, underscoring its importance for consumer protection. In statements cited by the source, Hochul stated that «New Yorkers deserve to know they are getting a fair deal when shopping online».
The Governor emphasized that the law «sheds light on hidden online pricing tactics that take advantage of consumers», especially during high-demand periods like the holiday season. The implementation of this law positions New York at the forefront of regulating AI-driven digital commerce.
Legal experts cited in the article suggest this state regulation could serve as a model for future federal regulations in the USA Reports indicate that lawmakers in at least ten other states are already evaluating similar initiatives, pointing to a growing regulatory trend in this area.
The final impact of the law will depend on its effective enforcement and how companies adapt their practices to comply with the new transparency standard.
