NYC Just Voted to Ban 'Surveillance Pricing.' Here's What It Means for Your Loyalty Program and Discounts

NEW YORK — The City Council on Thursday passed one of the country’s toughest limits on “surveillance pricing,” the practice of using algorithms and a shopper’s personal data to show different people different prices for the same thing. Most of the attention has gone to giants like ride-hail apps and big-box retailers. But the bill touches anyone in the five boroughs who runs a loyalty program, sends targeted coupons or sells through a delivery app, which is a lot of small businesses.

Here’s what passed, what’s still allowed and what owners should look at before it takes effect.

What the Council Passed

The bill, Introduction 891-A, sponsored by Speaker Julie Menin, bans any business or service provider from engaging in surveillance pricing, which the Council defines as pricing set “completely or in part by algorithm” that uses personal data to offer different prices to different customers for the same goods or services. It covers both online and in-store sales, Gothamist reported, though the practice is mainly used on the web.

The vote was 44-5, according to amNewYork.

Enforcement would fall to the city’s Department of Consumer and Worker Protection (DCWP), which could investigate and impose civil penalties of up to $1,000 per offense. Each affected customer or transaction could count as a separate violation. There’s no private right of action, meaning customers can’t sue under this law themselves, even though DCWP Commissioner Sam Levine had asked for one at a June hearing.

Mayor Zohran Mamdani said in a statement that he supports the ban, calling surveillance pricing “just another way corporations are finding to squeeze working people.”

Why Lawmakers Went After It

The Council cited an investigation in which a 55-inch TV on a major retailer’s app was priced at $499.99 inside the store and $599.99 once the shopper was in the parking lot, and another that found individualized price differences as high as 23% on a grocery delivery platform. Many companies that have faced scrutiny deny using the practice, Gothamist noted.

What Small Businesses Can Still Do

This is the part most owners will care about. The first version of the bill was two pages long. After a June hearing where retailers, hotels, delivery platforms and tech groups warned it could wipe out rewards programs, it grew to 10 pages with much more detail, amNewYork reported. Under the version that passed:

• Ordinary promotions, coupons and loyalty rewards stay legal, as do group discounts for people like veterans and seniors.
• Tiered loyalty discounts based on past purchases are expressly allowed, as long as you meet the bill’s disclosure requirements and limits on how personal data is used.
• Certain promotions offered through online marketplaces, such as delivery apps, are also permitted with disclosures.
• Businesses offering personalized discounts must keep a way for customers to ask what personal data was used to set their price.
• Regulated pricing like insurance and credit is carved out.

The rule of thumb: a discount that’s offered openly, on clear terms, is not the target. A price quietly nudged up or down for one person because of what an algorithm infers about them is.

A Grace Period, and a Warning Before Fines

Two changes matter a lot for smaller operators. First, the effective date was pushed from 120 days after enactment to one year, giving businesses time to review their tools. Second, for qualifying smaller businesses, DCWP must send notice of a first violation and allow 30 days to fix it, including paying restitution to affected customers, before penalties.

The Pushback

Not everyone is convinced the carve-outs go far enough. “If enacted, this law will make it harder for small restaurants with limited marketing budgets to reach customers, putting them at a disadvantage against national chains,” Uber spokesperson Josh Gold told Gothamist. Uber Eats lets restaurants target discounts using search history and past orders. The tech-industry group Tech:NYC also warned the bill goes too far, according to the Tech NYC Digest. Menin has said the law won’t affect discounts.

There’s also a state layer. The One Fair Price Act, which state lawmakers passed in June, would ban surveillance pricing statewide with enforcement by the attorney general. As of Wednesday it was still awaiting Gov. Kathy Hochul’s signature, amNewYork reported.

What to Do Now

You have time, but it’s worth a short audit, especially if you rely on software you didn’t build:

1. List every place a price can change per customer. That includes your POS loyalty module, email and SMS coupon tools, your e-commerce platform and any delivery-app promotions.
2. Ask your vendors how their discounts are set. If a tool uses “dynamic” or “personalized” pricing, get it in writing whether it uses personal data and how it plans to comply with Intro 891-A.
3. Put your loyalty terms in writing and in plain view. Clear, disclosed tiers (“spend $200, get 10% off”) are the kind of program the bill protects.
4. Plan for data requests. If you offer personalized discounts, decide now who will answer a customer who asks what data was used.
5. Watch for the final word. The bill still needs to become law, and DCWP will likely issue guidance. Albany’s version could add a second set of rules.

For most neighborhood shops, the takeaway is reassuring: the punch card, the birthday coupon and the regulars’ discount survive. What’s on notice is the invisible price tag.