NRF calls to block New York’s ‘algorithmic’ pricing law

The National Retail Federation (NRF) is calling for a New York law that would require retailers to disclose the use of “algorithmic” pricing to be blocked. The retail organisation has asked the federal court to halt the implementation of the law, which it claims would “unfairly malign a system that helps merchants give customers lower prices and personalised offers”.

The bill in question, the New York Algorithmic Pricing Disclosure Act, was passed and signed into law by the State’s Governor Kathy Hocul on May 9, and is due to take effect July 8. It will require retailers that set prices using information on customers to disclose the use of algorithmic pricing next to impacted products. The NRF hopes to put a stop to its implementation in its lawsuit filed in the US District Court in Manhattan, in which it has stated that the bill violates both the First and 14th Amendments.

According to the suit, such pricing systems “lower overall consumers prices in the aggregate”. It notes: “Studies have consistently shown that algorithmic pricing incorporating data on market conditions plays a powerful role in driving prices down because algorithms allow companies to be more responsive to supply and demand and so better optimize pricing to reflect market conditions.”

In a statement, NFR’s chief administrative officer and general counsel, Stephanie Martz, said: “This law interferes with retailers’ ability to provide their customers with the highest value and best shopping experience they can. Algorithms are created by humans, not computers, and they are an extension of what retailers have done for decades, if not centuries, to use what they know about their customers to serve them better. It’s just done at the scale of the modern economy. Stigmatising tools that drive prices down turns offering deals into a liability, and consumers will end up paying more."