• by Wendy Davis , February 13, 2026

New York Attorney General Letitia James is urging a federal appellate court to uphold a state law requiring companies that use algorithms for personalized pricing to make the following disclosure: “This price was set by an algorithm using your personal data."

That mandate is "reasonably related to the state’s interest in providing consumers with accurate information about whether their personal data was used by an algorithm to set the price of a good or service, which in turn, allows consumers to make more informed purchasing decisions," the attorney general argues in papers filed with the 2nd Circuit Court of Appeals.

The Algorithmic Pricing Disclosure Act, which took effect November 10, applies when companies use algorithms to set prices based on data that's linkable to consumers or their devices.

The National Retail Federation sued last year to block the law, arguing that the disclosure mandate violates the First Amendment by forcing companies to display warnings.

U.S. District Court Judge Jed Rakoff in New York dismissed the retail organization's complaint last October, ruling that the law merely requires companies to make factual statements about their use of algorithms.

He added that the statute is "reasonably related to government's legitimate interest" in ensuring that consumers are informed about pricing.

The retailers' group has appealed to the 2nd Circuit, arguing that the required disclosure "gratuitously causes consumers to feel they are being manipulated for profit, when, in reality, the retailer may simply be offering a small discount."

The organization wrote in its appellate brief that the disclosure "sounds ominous with its reference to 'personal data,' which triggers fears about privacy and surveillance; its implication that the consumer is being charged more or being treated unfairly vis-a-vis other consumers; and its use of the passive voice to suggest machines rather than humans are setting prices."

New York counters in papers filed this week that the National Retailer Federation is merely speculating about consumers' reactions to the disclosure.

"It is difficult to imagine that an ordinary consumer would infer from the disclosure that the price they are charged for 'grilling tools,' 'backpacks,' 'haircare,' or any number of products ... was based on their Social Security numbers or medical records," the attorney general argues.

James's office adds that retailers "are free to explain to consumers how they use algorithmic pricing to set a price or divulge the type of data used by their algorithms."

The attorney general also contends that the law furthers the government's legitimate interest in informing consumers about pricing.

"The growing use of personalized algorithmic pricing to charge consumers different prices for the same goods and services, by culling reams of personal data, has elicited justifiable concerns about fairness, personal privacy, and disparate impact," the attorney general's office writes.

The disclosure mandate "enables consumers to investigate and identify whether they are being charged fairly, to exercise control over the use of their personal data, and to avoid spending more money than other consumers on the same product," James adds.

The 2nd Circuit hasn't yet set a date for oral arguments.