Key point: A federal district court judge rejected the claim that the disclosure law violates the First Amendment.
On October 8, 2025, a judge for the U.S. District Court for the Southern District of New York granted the New York attorney general’s (AG) motion to dismiss a lawsuit filed by a retail trade association claiming that New York’s Algorithmic Pricing Disclosure Act violates the First Amendment. Below, we provide a brief history and summary of the law and analysis of the court’s decision.
History and Summary of the Law
The law was signed on May 9, 2025, as part of an omnibus budget bill (S.3008). The contents of the law were originally introduced as companion bills A6765 and S7033 and added to the omnibus bill prior to its passage.
The law requires any entity that “sets the price of a specific good or service using personalized algorithmic pricing, and that directly or indirectly, promotes, labels or publishes a statement, display, image, offer or announcement of personalized algorithmic pricing to a consumer in New York, using personal data specific to such consumer” to “include with such statement, display, image, offer or announcement, a clear and conspicuous disclosure that states: ‘This price was set by an algorithm using your personal data.'”
The law defines personalized algorithmic pricing as “dynamic pricing set by an algorithm that uses personal data.” Personal data is defined as “data that identifies or could reasonably be linked, directly or indirectly, with a specific consumer or device.” However, it excludes certain types of location data. Finally, the law defines clear and conspicuous disclosure to mean a “disclosure in the same medium as, and provided on, or at, or near and contemporaneous with every advertisement, display, image, offer or announcement of a price for which notice is required, using lettering and wording that is easily visible and understandable to the average consumer.”
The law exempts certain financial institutions, insurance companies, and certain types of offers from existing subscription-based relationships.
The law is enforceable by the AG, who first must issue a cease-and-desist letter and offer an opportunity for the entity to cure the violation. Absent a cure, the AG is authorized to seek a $1,000 penalty per violation and injunctive relief.
Case History and Ruling
Shortly before the law’s July 2025 effective date, a retail trade association filed a lawsuit claiming that the law violated the First Amendment and moved for a preliminary injunction. The AG subsequently moved to dismiss the complaint and agreed to stay enforcement of the law until 30 days after the court ruled on the motion practice.
Ruling in the AG’s favor, the court first concluded that the law should be reviewed under a more permissive First Amendment standard under which “a commercial disclosure law does not offend the Constitution so long as it is reasonably related to the state’s interest in preventing deception of consumers and [is] not unjustified or unduly burdensome.” (internal quotation marks omitted). Applying that standard, the court held the “challenged disclosure is reasonably related to the government’s legitimate interest in ensuring that consumers are ‘inform[ed]’ about the terms on which products are offered to them, including the price.” The court also referenced the legislative history of S7033 in which the bill sponsor’s memo argued that companies can use algorithmic pricing to charge consumers different prices for the same product or service and that the bill was aimed “to protect New York consumers by requiring disclosures when prices are based on personal data” in order to “increase transparency, promote fairness, and help consumers make informed decisions.”
The court also rejected the plaintiff’s argument that the disclosure requirement is aimed only at a “purely hypothetical” problem, noting that the plaintiff admitted its members used algorithmic pricing. It further found the disclosure requirement was not unduly burdensome and the requirement did not prevent the plaintiff’s members from communicating any other message they wanted to consumers.
The retail trade association has not yet indicated if it will appeal the decision. As noted, the AG’s office previously agreed not to enforce the law until 30 days after the court’s ruling, which is Saturday, November 8, 2025.
