FTC proposes disclosure rule for personalized pricing based on consumer data
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The Federal Trade Commission is seeking public comment on an enforcement policy statement that would require companies to disclose when they use personal data to set individualized prices. The proposal warns that failing to disclose such practices could violate the FTC Act's prohibition on unfair or deceptive practices. The comment period runs through Sept. 18.
Key Facts
- The FTC is seeking public comment on an enforcement policy statement concerning personalized pricing, defined as using personal data to determine how much a company believes an individual consumer is willing to spend.
- The proposal would warn companies that failing to disclose use of personal data to set prices could violate the FTC Act's prohibition on unfair or deceptive practices.
- FTC Chairman Andrew Ferguson said the agency lacks legal authority to ban personalized pricing in all circumstances, but businesses that fail to disclose may be in violation of the FTC Act.
- The proposal is open for public comment through Sept. 18.
- In July 2024, the FTC ordered eight companies involved in pricing technology to provide information about their use of customer data, including location, demographics, credit history, and browsing or shopping history.
Proposal Details
The FTC defines personalized pricing as using personal data to determine how much a company believes an individual consumer is willing to spend. The proposed enforcement policy statement would warn companies that failing to disclose such practices could violate the FTC Act's prohibition on unfair or deceptive practices. FTC Chairman Andrew Ferguson stated that consumers expect a listed price to be the same for everyone, not an estimate based on personal data. Ferguson acknowledged the FTC lacks legal authority to ban personalized pricing in all circumstances, but emphasized that non-disclosure may violate the FTC Act and other enforced laws.
Background and Context
The action follows more than two years of FTC scrutiny into what it calls 'surveillance pricing.' In July 2024, the FTC ordered eight companies involved in pricing technology to provide information on their use of customer data, including location, demographics, credit history, and browsing or shopping history. Then FTC Chair Lina M. Khan said Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing. The FTC's January 2025 findings indicated pricing intermediaries could use information ranging from precise location and browser history to shopping behavior and mouse movements to tailor prices. The agency said the companies it examined had worked with at least 250 clients, including grocery retailers.
Dynamic Pricing Distinction
The FTC recently flagged dynamic pricing, which sets prices based on supply and demand, inventory levels, and competitor pricing. An FTC research document noted that companies using e-commerce websites or electronic shelf labels could potentially make price changes with similar frequency. The document stated that consumers expect prices to change based on supply and demand, not web surfing habits or buying history. Retailers who represent or imply that a price is static when it varies by individual are at risk of misleading customers, according to the FTC.
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FTC proposes disclosure rule for personalized pricing based on consumer data
