NEW YORK CITY— If roommates decide to take an Uber ride home from a bar, the unspoken rule dictates they should both check the app.
Even though they're going to the same place at the same time, oftentimes, one user might have the option for a cheaper ride.
City Council officials tested that idea, Speaker Julie Menin said. The Council used 10 rideshare accounts with route and time controls, and found consistent differences in the price and discounts offered.
The Council voted on Thursday to prohibit companies from using algorithms and consumers' personal data to set different prices for the same goods or services.
The Committee on Consumer and Worker Protection voted 9-0 in favor of the legislation, with no votes against it.
The proposal, Intro. 891-A, would apply to businesses operating in New York City and establish new enforcement powers for city agencies.
Menin, the bill's lead sponsor, said the proposal could lower costs for consumers, citing groceries and airline tickets as examples of where personalized pricing could affect household budgets.
Separately, the One Fair Price Act, the state's legislation on surveillance pricing, remains on Gov. Kathy Hochul's desk, awaiting her signature.
Lindsay Owens, president of Groundwork Collaborative, a nonprofit economic policy organization, said Instacart, Uber and the National Retail Federation are lobbying against the proposed state legislation.
"The delay works in the favor of the companies who have armies of lawyers and lobbyists in Albany right now," Owens said.
A Groundwork survey conducted in May found that 80 percent of New Yorkers believed companies should not be allowed to use personal data to increase prices.
"Purchase history is kind of the whole ball game," Owens said, warning the exemption could undermine the bill.
"It's sort of the best behavioral data that they can get," she said.
Intro. 891-A includes several exceptions allowing companies to offer certain discounts and adjust prices under specific circumstances:
Eliminating personalized pricing based on demographics and income could lower prices for some consumers while increasing them for others, depending on how businesses respond, according to Liam Rice, a lecturer of mathematics and economics at Bryant University.
Economic theory suggests that when businesses can no longer charge different prices based on neighborhood, they may settle on a single price somewhere between the previous prices, Rice explained.
Wealthier shoppers who currently pay more based on their perceived willingness to spend could see prices fall, while lower-income shoppers who receive location-based or other discounts could face increases.
But a uniform price could also change where businesses operate, Rice said.
A company serving a lower-income neighborhood because it could offer lower prices there might decide to leave the market rather than charge the same price across all locations, an American Economic Review study reported.
Both practices can produce changing prices, but they rely on different information.
Dynamic pricing adjusts prices in response to market conditions, such as demand, inventory, expiration dates and competitor prices. In its narrow definition, every shopper sees the same price at a given moment.
Personalized pricing, by contrast, uses individual consumer information to determine what a particular shopper pays.
Intro. 891-A would give the New York City Department of Consumer and Worker Protection authority to investigate violations and seek civil penalties of up to $1,000 per violation.
The City could also seek court orders requiring businesses to stop prohibited practices, return money to affected consumers and pay restitution.
The City could request those records electronically. The corporation counsel would also have authority to investigate potential violations and subpoena witnesses and documents.
Smaller businesses meeting the bill's definition of a covered business would receive an opportunity to correct a first violation within 30 days of receiving notice. They would also have to provide restitution to affected consumers.
If enacted, the legislation would take effect one year after becoming law.
Felix Shipkevich, a special professor of law at Hofstra University, questioned whether the proposed legislation would offer meaningful protections beyond those already available under existing consumer protection laws.
"Is this just another check in the box to show that the state's doing something to protect consumers?" Shipkevich said.
He argued that existing consumer protection laws already give state attorneys general, the Federal Trade Commission and other authorities tools to pursue businesses accused of harming consumers.
Those investigations often begin with complaints, which agencies analyze for patterns before assigning investigators.
"It's all going to be done through subpoenas, right? Which is going to create a substantial burden on merchants," he said. "The law is only as good as you enforce them."
Requiring companies to record the prices they show consumers, along with the data and variables used to calculate those prices, could give regulators a way to investigate potential violations without relying solely on interviews with company executives, Rice said.
"Regulators can tell them apart by comparing what two shoppers see at the same moment at the same store," Rice said.
The Department of Housing and Urban Development has used similar testing methods to investigate housing discrimination, Rice said.
He also pointed to the Affordable Care Act, which limits the factors insurers can use to determine health insurance premiums, as a possible model for pricing oversight.
Consumers may have difficulty identifying surveillance pricing because a single price does not reveal whether a company offered someone else a different amount.
Companies control what individual shoppers see, making comparisons difficult without access to multiple accounts or devices.
Consumers increasingly rely on online platforms to identify potential unfair pricing practices, often turning to social media, Reddit and customer reviews to compare experiences, Shipkevich said.
Searching a company's name alongside consumer complaints on platforms such as Google and Yelp can help shoppers identify patterns of questionable business practices, he said.
Consumers could also compare prices by searching for the same product through a logged-out browser, another device or a friend's account, Rice said.
"Your best defense is looking price sensitive," Rice said. "A shopper who checks a second site is more expensive to exploit than a shopper who immediately clicks buy."
Data companies can collect through online shopping, including mouse movements, abandoned shopping carts and the amount of time consumers spend considering a purchase.
Loyalty programs also give retailers access to purchase histories in exchange for discounts and promotional offers. Those programs can help businesses identify when customers need an incentive to buy and when they might purchase an item regardless of its price.
Rice cautioned consumers against automatic renewals because companies often rely on customers overlooking monthly price increases.
He recommended purchasing products or services manually each month rather than subscribing, allowing consumers to review changing prices and avoid unwanted charges.
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