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New Yorkers got a little more visibility this week into when apps like Uber and DoorDash use algorithms to set prices.
The state’s Algorithmic Pricing Disclosure Act took effect on Monday. Under the law, businesses have to tell customers when they are using their personal data, such as where they are and what they’ve purchased in the past, to determine prices.
For some New York residents, the first sign of the new law was a message that popped up on their phone screen while ordering food delivery.
On the DoorDash app, New York users got a notice that the new law “requires that we make the following disclosure because we use information such as your delivery address to calculate distance and fees, and your past orders and favorite stores to provide personalized promotions and/or discounts.”
“This price was set by an algorithm using your personal data,” the disclosure reads.
Uber users in the state may have noticed a similar disclosure on the screen before checkout on the app, although it didn’t cite the new law.
“This price was set by an algorithm using your personal data,” the disclosure reads. “Your location is used to help us calculate fees and savings.”
The notice did not appear in the app when Business Insider used it outside New York. A company spokesperson did not immediately respond to a request for comment about the disclosure.
These new disclosures tell customers when businesses are using algorithms and customer data to determine prices. But exactly how companies like Uber and DoorDash use that information to serve up prices to users, in many cases, remains a mystery.
Uber’s ride-hailing business, for example, has implemented what the company calls upfront pricing over the last few years. The model took the company away from a more predictable rate card for pricing rides and toward a system that uses Uber’s data on past trips and users to determine pricing.
A study conducted earlier this year found that upfront pricing has helped Uber determine the most money that riders are willing to pay for a trip — a tactic that helped the company become profitable, the study said. Uber said in June that its algorithms “do not use information about an individual rider or driver’s personal characteristics” to set prices.
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