When I see a state law change that may impact my clients whose reach expands into other jurisdictions, including the Big Apple State, I do what I can to provide content and information on the subject. In this case, the State of New York recently passed consumer protection legislation that will impact retail companies – on-line and brick-and-mortar – that operate in New York.
Algorithmic Pricing
Section 349-a “Pricing” was added to the New York General Business Law statutes. The law requires any business operating in New York and that uses personal data to establish algorithmic pricing to clearly and conspicuously display the phrase – “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA” – “in the same medium as, and provided on, at, or near and contemporaneous with every advertisement, display, image, offer or announcement of a price for which notice is required, using lettering and wording that is easily visible and understandable to the average consumer.”
An “algorithm” is simply and broadly defined as “a computational automated process that uses a set of rules to define a sequence of operations.” The term “personal data” is also broadly defined to mean “any data that identifies or could reasonably be linked, directly or indirectly, with a specific consumer or device.”
Various business sectors are exempt from the pricing statute, such as insurance companies, certain financial institutions, and businesses that offer discounts under pre-existing subscription contracts.
The New York Attorney General may enforce the statute by issuing a cease-and-desist letter to the entity at issue, specifying the alleged violation and the remedies to cure the violations within a designated timeline. If the covered business does not comply and continues to violate the statutory requirements, the New York Attorney General may seek an injunction through a court, and an injunction may be issued even without proof of actual injury to any person.
A civil penalty of up to $1,000 per violation may also be imposed by the court. Section 349-a expressly states that it “shall not be construed to limit any other criminal or civil liability[,]” which potentially extends the scope of possible enforcement.
These requirements take effect on July 8, 2025.
See Section 349-a here: https://www.nysenate.gov/legislation/laws/GBS/349-A
Return and Refund Policies
New York also amended Sections 217 and 218-a of the General Business Law Statutes to include online retailers within the fold of businesses that must comply with New York’s refund policy disclosure requirements.
Section 217 was amended to include a definition of “online retailer,” defined as “a seller of goods, wares or merchandise, primarily for personal, family or household purposes, excluding used goods, who offers to consumers in New York such items for sale online through a website, mobile application or other online platform.” The definition excludes an online marketplace, such as Amazon Marketplace, where such marketplace is not the seller of the particular goods, wares or merchandise.
The amendment to Section 218-a makes New York’s existing brick-and-mortar storefront refund disclosure requirements applicable to online retailers.
Every retail mercantile establishment and online retailer shall conspicuously post, in the following manner, its refund policy as to all goods, wares or merchandise offered to the public for sale:
- on a sign attached to the item itself; or
- on a sign affixed to each cash register or point of sale; or
- on a sign so situated as to be clearly visible to the buyer from the cash register; or
- on a sign posted at each store entrance used by the public; or
- in case of an online retailer, by a notice displayed or made accessible by hyperlink near the item itself or by a notice displayed to or made accessible by hyperlink by the consumer prior to requesting billing information.
(Emphasis added).
The required “sign” must state whether or not it is the policy of such establishment or online retailer to give refunds and, if so, under what conditions, including whether a refund will be given:
(i) on merchandise advertised as “sale” merchandise or marked “as is;”
(ii) on merchandise for which no proof of purchase exists;
(iii) at any time or not beyond a point in time specified;
(iv) in cash, or as credit or store credit only; or
(v) subject to any fees, including a restocking fee, and the dollar or percentage of the fee; and
The sign must also advise consumers that they are entitled to a written copy of the refund policy upon request.
A covered business that fails to comply with the refund disclosure requirements is liable, for a period of up to 30 days from the date of purchase, “to the buyer for a cash refund or a credit, at the buyer’s option, provided that the merchandise has not been used or damaged by the buyer and the buyer can verify the date of the purchase with a receipt or any other purchase verification method utilized by the retail merchant.”
Section 218-a expressly states that it does not exempt compliance “with any law, ordinance, rule or regulation of any locality relating to the posting of refund policies which affords the buyer greater protection than do the provisions of” Section 218-a, so retailers operating in New York should investigate whether any local laws require greater protection or requirements than those set forth in Section 218-a.
These laws will become effective August 7, 2025.
See Section 218-a here: https://www.nysenate.gov/legislation/laws/GBS/218-A.
See Section 217 amendment here: https://www.nysenate.gov/legislation/laws/GBS/217
