[THIS POST HAS BEEN UPDATED TO REFLECT CHANGES TO THE LEGISLATION PRIOR TO SIGNING.]
On May 9, 2025, New York Governor Kathy Hochul signed Assembly Bill A3008 into law. The omnibus legislation mandates transparency in personalized algorithmic pricing. The new law also requires operators of AI companions to implement safety protocols and disclose bot usage to consumers. The requirements take effect July 8, 2025, and November 5, 2025, respectively.
Personalized Algorithmic Pricing
Key Terms Under the New Law
• “Dynamic pricing” means pricing that fluctuates dependent on conditions.
• “Personalized algorithmic pricing” means dynamic pricing derived from or set by an algorithm that uses consumer data (i.e., data that identifies or could identify the person making a purchase or lease of goods or services).
Restrictions
A3008 amends New York’s deceptive acts and practices law to prohibit any person from knowingly offering personalized algorithmic pricing specific to a particular individual without a clear and conspicuous disclosure stating, “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”
The law exempts from the disclosure requirement, (i) businesses subject to New York’s Insurance Law, (ii) financial institutions or their affiliates, to the extent they are subject to the Gramm Leach Bliley Act, and (iii) financial institutions as defined in New York’s Financial Services Law.
The law also exempts prices that are offered to a consumer who has an existing subscription-based contract for goods or services with a business where the prices are less than the prices for the same goods or services in the subscription-based contract.
The state attorney general may seek civil penalties for failure to provide notice in connection with personalized algorithmic pricing, including a maximum fine of $1,000 per violation. The law does not explicitly provide a private right of action.
An earlier version of A3008 also prohibited the use of protected class data to set prices for any good or service if (i) the use of the data caused the withholding or denial of any accommodations, advantages and privileges accorded to others, or (ii) the price of such goods or services was different from the price offered to other individuals or groups based on the use of protected class data. Although this prohibition was removed, the discriminatory use of protected class data in price setting could still be addressed under New York’s Human rights Law, the state’s antidiscrimination statute.
The personalized algorithmic restrictions take effect July 8, 2025.
AI Companions
Key Terms Under the New Law
• “AI companion” is a system that uses artificial intelligence or emotional recognition algorithms (i.e., AI that detects and interprets human emotion) to simulate social human interaction (i) by retaining information on prior interactions and user preference, (ii) asking unprompted emotion-based questions that go beyond a direct response to a user prompt; and (iii) sustaining an ongoing dialogue concerning matters personal to the user.
• “Operator” means any person or business entity who operates or provides an AI companion.
Requirements
Operators must implement protocols in AI companions to take reasonable efforts to detect and address user expressions of suicidal ideation or self-harm. The protocols must include, at a minimum, a notification referring users to crisis service providers, such as a suicide hotline or other crisis services.
Operators also are required to notify users that they are communicating with a bot at the beginning of an AI companion interaction and at least once every three hours during ongoing interactions. The notification must verbally or in writing state that the user is not communicating with a human.
The state attorney general may seek a maximum civil penalty of $15,000 per day for a violation. The law does not explicitly provide a private right of action.
The requirements for operating and providing AI companions take effect November 5, 2025.
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