NRF Retail Law Summit

Regulatory Storm Ahead

Retailers are entering 2026 amid a perfect storm of regulatory upheaval. New laws on artificial intelligence, data privacy, and employment practices are rolling out, many effective from January 1. California's Frontier AI Transparency Act, for instance, imposes disclosure requirements on advanced AI systems, while the state's updates to the Consumer Privacy Act demand opt-out options for automated decision-making in hiring and promotions. At the federal level, the Trump administration's executive order aims to preempt conflicting state AI rules, creating uncertainty for multistate operators.

Organized retail crime remains a flashpoint. The National Retail Federation reports persistent threats from sophisticated networks, with theft and violence driving up losses and prompting operational changes like locked displays. The Combating Organized Retail Crime Act, advancing in Congress, seeks federal coordination, but retailers warn of ongoing risks without swift passage. Meanwhile, SNAP program waivers in 18 states by October introduce conflicting product restrictions, projecting $1.6 billion in implementation costs that hit small stores hardest.

Pricing and product safety add layers of complexity. Regulators are scrutinizing personalized pricing algorithms for transparency, intersecting with antitrust concerns. The Consumer Product Safety Commission is ramping up enforcement, with higher penalties for non-disclosure. Environmental rules, such as the EU's Packaging and Packaging Waste Regulation applying from August, ban certain unsold product destructions and mandate sustainability reporting, pressuring global supply chains.

Employment shifts compound the challenges. Pay transparency laws expand in states like New York and California, while union organizing gains traction in retail amid predictive scheduling mandates. Reverse discrimination claims, encouraged by federal officials, could spike litigation. Tariffs, potentially reimposed, disrupt imports; Goldman Sachs estimates consumers bear 55% of the burden, squeezing margins for apparel and electronics sellers.

Non-obvious tensions emerge in these overlaps. Federal AI preemption may ease burdens but spark state-federal clashes, delaying clarity. AI's efficiency in inventory and hiring trades off against bias risks, with EEOC enforcement targeting un-audited tools. Smaller retailers, lacking resources for compliance, face disproportionate impacts, potentially accelerating consolidation. Class actions over marketing claims, like those on 'Made in USA' labels, highlight retailer liability for third-party products on platforms.