If you’re shopping for groceries in New York, you might notice price discrepancies based on your location due to algorithmic pricing driven by personal data. For instance, a carton of Target’s Good & Gather eggs is priced at $1.99 in Rochester but jumps to $2.29 in Manhattan’s Tribeca neighborhood. This variation is now under scrutiny due to a recently enacted New York State law mandating that retailers disclose whether such prices are influenced by customer data.
The law requires retailers to inform consumers if their personal data—broadly defined as any information linked to an identifiable individual—is used in setting prices. However, it does not require details on what specific data is used or how it impacts pricing. A notable exemption exists for location data, which is only permissible for calculating fares for rideshares.
Retailers like Target must disclose this pricing methodology in a "clear and conspicuous" manner, though finding such disclosures can be challenging. For example, Target’s notice about data-driven pricing is typically embedded behind an information icon next to item prices, which could easily be overlooked by consumers.
This isn’t a new phenomenon. Businesses, including Target, have previously varied prices based on geography and user location data. In 2021, it was reported that Target’s prices shifted according to the user’s location, a practice they justified as a reflection of local market conditions.
In addition to eggs, other basic goods like toilet paper are experiencing similar pricing variations based on the associated store location. For instance, the price for a six-pack of Mega Charmin Ultra Strong is about $8.69 in Flushing but $8.99 in Tribeca.
Target is not alone in this practice. Other companies have also engaged in location-based pricing. A 2012 report highlighted that Staples used customer location to display different prices online. Similarly, a 2015 ProPublica investigation found that the Princeton Review’s pricing for tutoring services fluctuated significantly based on customers’ zip codes.
Amid growing concerns over "surveillance pricing," the Federal Trade Commission (FTC) initiated a market study last year to analyze how businesses leverage personal data for pricing strategies. Although an interim report was published, no final findings have been released yet.
Beyond eggs and toilet paper, it remains largely unclear which other products are subjected to algorithmic pricing. The New York law could pave the way for similar regulations in other states, as seen with Pennsylvania introducing comparable legislation earlier this year. There’s also federal attention on this issue with proposed bills addressing surveillance pricing.
As the conversation around algorithmic pricing continues, major retailers like Target are also exploring advancements in customer engagement, such as integrating shopping experiences within AI platforms like OpenAI’s ChatGPT.
For more information on the New York law, you can check the text of the legislation here.
