NYC to bar surveillance pricing as momentum for bans grows nationwide

The metropolis is the second city in the country to pass legislation banning surveillance pricing, following Seattle, where a similar ban was signed into law last month. The New York City Council voted 44-5 on Thursday in favor of the bill, with Mayor Zohran Mamdani celebrating its passage.

Legislation details

The bill allows the city's Department of Consumer and Worker Protection to fine companies deploying surveillance pricing up to $1,000 for each violation. However, it carves out "bona fide discounts and rewards that are legitimate and transparent, from buy-one-get-one-free deals and loyalty programs to discounts for veterans and students." Mamdani told the media "when corporations use your personal data to decide what you pay, you only stand to lose."

National momentum

"Once this bill becomes law and goes into effect, it will mean eight million fewer people will have to guess about whether their search history, what they are hovering over online, and more, is shaping the price they see," said Grace Gedye, a Consumer Reports policy analyst who worked on the effort to push it through.

Gedye noted that businesses may need to change their pricing practices nationwide if they already have to comply with New York City regulations. "It also means a lot of businesses may need to change their pricing practices — and if they already have to do it for New York City, they may decide to do it for the rest of the country at the same time."

New Jersey, Connecticut and Maryland already have similar bans on the books, and many more state legislators nationwide are expected to introduce bills when new sessions begin early next year, according to George Slover, senior counsel for competition policy at the Center for Democracy and Technology.

Growing concerns

"There is a lot of interest around the country in this issue," Slover said. "It's viscerally offensive to consumers to think about the fact that they are being basically sized up for their willingness to pay more and eliminate the advantage that they've had all these years, where … the consumer is essentially anonymous when the price is set."

The New York City Council called the practice "predatory," citing a whistleblower from a major rideshare company who revealed his firm's app charged consumers with low phone batteries more for the same ride because "they might not otherwise be able to get home if they do not accept the high offer."

With rising consumer goods prices and data brokers selling detailed consumer profiles, there is widespread suspicion that different consumers are being charged varying amounts based on algorithms. Grocery stores, ride sharing companies and airlines are thought to be widely using surveillance pricing, though public evidence remains limited.

Federal response

In October, the Federal Trade Commission ordered nine food delivery, airline, ride-sharing and retail companies to answer extensive questions about how they exploit personal data to set higher prices for some consumers. Companies receiving the orders include major airlines, Uber, DoorDash, Walmart and Target.

FTC officials plan to study the "opaque methodology" used to set prices in an era when powerful technologies, data brokers and algorithms can easily reveal granular information about specific shoppers. In 2022, Target paid $5 million to settle a lawsuit showing customers in parking lots were offered lower prices than those in store.