Retail Trade Association Files Legal Action Against New York Over Price-Setting Regulation Based on Algorithms
A federal court in New York has issued a general stay of enforcement on the New York Algorithmic Pricing Disclosure Act, temporarily preventing the state from enforcing the law's disclosure requirements. This stay follows the National Retail Federation's (NRF) challenge, which argues that the mandated disclosure is misleading, inaccurate, and damages consumer trust.
The NRF filed the lawsuit, contending that the law forces speech that businesses disagree with and unjustly implies that algorithmic pricing is harmful. The lawsuit seeks preliminary and permanent injunctions blocking its enforcement. The New York Attorney General, however, has requested dismissal, emphasizing that the law simply requires a clear disclosure and does not restrict algorithmic pricing.
Businesses in New York are currently relieved from complying with the disclosure requirement while the preliminary injunction is pending. If the court eventually denies the NRF’s challenge, enforcement cannot begin until 30 days after the final order. The Attorney General has agreed not to pursue violations before this 30-day grace period ends.
Critics argue that the law's disclosure is overly broad and risks confusing consumers and chilling innovation in pricing technology without evidence of harm. The NRF, in its lawsuit, states that the New York Algorithmic Pricing Disclosure Act is unsupported by facts that algorithmic pricing is inherently harmful.
Retailers, according to the NRF, have historically used data received in the ordinary course of business to provide promotions to customers. Algorithmic pricing, it says, allows them to do this with greater sophistication and on a larger scale. The NRF claims that the measure would unfairly malign a system that helps merchants give customers lower prices and personalized offers.
The NRF argues that retailers use algorithmic pricing to help customers save money by using their purchase history, items in their online shopping cart, ZIP code, and other information customers voluntarily share. The lawsuit points out that any discrimination or price gouging that might inadvertently occur is already prohibited by other state laws.
Examples given include grocers offering coupons, coffee shops giving rewards cards, and online merchants offering promotions based on shopping cart abandonment. The New York Algorithmic Pricing Disclosure Act was signed by Gov. Hochul on May 9 and is set to take effect on July 8.
Stephanie Martz, NRF Chief Administrative Officer and General Counsel, notes that the law interferes with retailers' ability to provide customers with the best shopping experience. Martz asserts that algorithms are an extension of what retailers have done for decades to use what they know about their customers to serve them better.
The Washington, D.C.-based NRF advocates for the people, brands, policies, and ideas that help retail succeed. As of mid-August 2025, the law’s enforcement is on hold due to the NRF’s lawsuit, which contends that the mandated disclosure is unconstitutional and harmful to consumer trust. The court’s final decision on the permanent injunction is still pending, and no enforcement has yet occurred beyond the initial implementation date.
- The National Retail Federation (NRF) asserts that the New York Algorithmic Pricing Disclosure Act is detrimental to businesses, as they argue that the mandated disclosure could damage consumer trust and hinder innovation in pricing technology, particularly in the realm of finance and technology.
- In its lawsuit, the NRF also contends that algorithmic pricing, which retailers employ to help customers save money by using their purchase history or ZIP code, for example, is a crucial aspect of their business operations, benefiting both merchants and consumers within the confines of the technology and finance sectors.
