EPIC Urges Second Circuit to Recognize Constitutionality of Surveillance Pricing Transparency Law

This week, EPIC filed an amicus brief in National Retail Federation v. James to tell the Second Circuit why the First Amendment does not block New York from requiring businesses to tell users when the business sets prices for goods using surveillance pricing. 

Surveillance pricing is a quickly expanding practice in which companies crunch individuals’ personal data to discover the maximum price an individual would be willing to pay for a good or service and setting that price for each individual. Motivated by privacy and fairness concerns, legislatures across the country are considering a variety of laws to regulate this practice. New York passed a consumer transparency law called the Algorithmic Pricing Disclosure Act to require businesses using surveillance pricing to disclose to consumers, “This price was set by an algorithm using your personal data.”

The National Retail Federation, a retail company trade group, filed suit against New York to overturn the law. According to NRF, the law violates companies’ speech rights by forcing companies to tell consumers about surveillance pricing. This is impermissible, the trade group argues, because some consumers may not like surveillance pricing, so the disclosure is a controversial statement of opinion, not a fact.

As EPIC’s brief explains, NRF’s lawsuit seeks to turn the First Amendment on its head. Courts have long recognized under a series of cases since Zauderer v. Ohio Office of Disciplinary Counsel that the government may require businesses to inform consumers about commercial practices that affect them, especially when it relates to pricing. This is why it is constitutional to require transparency measures such as food labels, drug prices, and personal data use disclosures in privacy policies. Just because commercial practices such as including GMO ingredients, setting content moderation policies, or engaging surveillance pricing are controversial doesn’t mean that telling consumers true facts about those practices is unconstitutional. It’s all the more reason why informing consumers is important and consonant with First Amendment values of enabling consumers to make informed choices.

EPIC regularly files amicus briefs in cases involving the intersection of speech and privacy rights and has advocated for tighter controls over surveillance pricing.