NY Leaders Flag New State Laws on Algorithmic Pricing, AI Chatbots
Fresh New York state laws on algorithmic pricing and AI chatbots that are now in effect prompted comments from elected officials about the statutes' importance.
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New York’s algorithmic pricing bill took effect Monday. Last week, Attorney General Letitia James (D) issued a consumer alert encouraging state residents to exercise their privacy rights and alert authorities about businesses that fail to acknowledge that they're using algorithmic pricing (see 2511050046).
The Algorithmic Pricing Disclosure Act requires disclosures by companies that consider consumers’ personal data to automatically and dynamically adjust prices. Companies that fail to disclose the practice may face penalties of $1,000 per violation.
“The attorney general can send cease-and-desist letters wherever there is ‘reason to believe that there is an alleged violation,’ including based on consumer complaints,” Jones Day attorneys blogged this month. Also, they noted the law carries “no maximum total penalty” and “no proof of individual consumer harm or damages is required.”
The pricing law could especially affect hotels, Akerman lawyers Jennifer Kramer and Ashley Akapo blogged Friday. “Hotels often employ sophisticated revenue management software that rely on algorithms to optimize pricing in real time,” noted the firm’s lawyers.
The Act was set to go into effect in July, but after the National Retail Federation (NRF) claimed in a suit that the law violates the First Amendment (see 2507070042), James paused the measure until a federal court ruled in the case (see 2507150052). On Oct. 8, the U.S. District Court for Southern New York sided with James and allowed the law to stand (see 2510090015). The NRF appealed on Nov. 3 (see 2511030024).
Meanwhile, New York Gov. Kathy Hochul (D) wrote an open letter last week reminding AI companion operators of their obligations under a chatbot law that took effect Nov. 5. The requirement was enacted as part of the state budget, the governor’s office noted in a press release Monday.
“The new law … requires companies to put strict safety rules in place so chatbots cannot exacerbate thoughts of suicidal ideation or self-harm expressed by its users,” Hochul wrote. “New York's law mandates intervention protocols for a reason: compliance will help make sure that users who reach out in moments of vulnerability will receive immediate referrals to professional crisis resources.”
In the governor’s press release, James added, “No company should be able to profit off an AI companion that puts its users at risk.”