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Sunday, Mar 16, 2025

New Regulation Mandates Transparency in Pricing Algorithms

New Regulation Mandates Transparency in Pricing Algorithms

Spanish Ministry of Social Rights and Consumption to enforce rules ensuring companies disclose details of dynamic pricing algorithms.
The Spanish Ministry of Social Rights, Consumption, and the 2030 Agenda is preparing to implement new regulations that require businesses using algorithms for setting prices to clearly explain the parameters involved in these pricing variations.

Companies will be mandated to ensure that the criteria used for these algorithms are 'transparent and accessible to consumers,' as stated in an official release.

Minister Pablo Bustinduy announced the forthcoming regulations, which will prohibit any algorithmic pricing parameters from being 'discriminatory or taking advantage of emergency situations.'

Under the new regulations, businesses will not be allowed to automatically adjust prices throughout the purchasing process, aimed at preventing consumers from feeling pressured to make hasty decisions due to uncertainties stemming from fluctuating prices.

This includes scenarios where price increases occur due to heightened demand, low mobile battery, or similar circumstances.

An illustrative example of the implications of this regulation can be seen in ride-hailing services that utilize dynamic pricing.

Such companies will be required to provide clear information to users about how their displayed prices are calculated.

Consumers will gain insight into parameters affecting the price, such as distance to the destination, time of travel, frequency of the trip, or the occurrence of major events nearby.

Additionally, the use of discriminatory factors for determining pricing will be prohibited; this includes variables such as a user's disability status or racial profile.

Prices cannot be set based on emergencies or urgent needs, such as a user’s low mobile battery.

These measures continue the efforts made by the Ministry of Social Rights and Consumption during the DANA event in October 2022, which caused significant damages across parts of the country, particularly in the Community of Valencia.

At that time, the ministry had already banned price personalization from resulting in price hikes during periods of peak demand linked to emergencies, risks, or urgent needs.

Minister Bustinduy emphasized that 'no business model can be sustained on the violation of rights' and highlighted the importance of democratizing economic relationships to achieve fair, transparent exchanges.

This statement was made during the event titled 'Consumer Rights in the Digital Domain,' held at the Ministry of Social Rights, Consumption, and the 2030 Agenda, in celebration of World Consumer Rights Day.

In addition, Bustinduy focused on ensuring transparency in digital consumption environments, insisting that consumers must have access to clear and truthful information.
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