FTC Warns Retailers on Personalized Pricing Using Consumer Data

The U.S. Federal Trade Commission (FTC) has issued a warning to retailers, stating that they must clearly disclose when they use consumers' personal data to personalize prices. According to a proposed enforcement policy statement released by the FTC, businesses will be required to make clear and conspicuous disclosures of such personalized pricing practices and the types of data utilized. Failure to do so could result in legal proceedings for violating federal consumer protection laws.

The FTC defines personalized pricing as the use of an individual consumer's data to estimate how much that person is willing to pay. While acknowledging that the full extent of this practice is not well understood, the Commission emphasized that consumers suffer a "substantial injury" when they pay higher prices due to the undisclosed use of their personal data. FTC Chairman Andrew Ferguson stated, "When consumers see a listed price, they expect it to be the same price that everyone else sees, not the retailer's estimate of how much they are willing to pay based on their personal data."

The agency's proposed policy statement outlines scenarios that could raise legal concerns, such as food delivery companies quoting higher prices to consumers believed to be less able to leave their homes, a grocery chain charging more for milk based on the number of children in a household, or a rideshare company charging more to a user who has not installed a competitor's app on their phone. A preliminary report published in January 2025 also highlighted examples like new parents being shown higher-priced baby thermometers in search results.

This development is part of a broader regulatory debate concerning price transparency and data privacy. The FTC acknowledged it lacks the authority to outright ban personalized pricing but intends to deploy enforcement resources against companies that fail to meet its disclosure standards. The Commission noted that informed consumers might otherwise take steps to avoid higher personalized prices, such as using a virtual private network (VPN), private browsing sessions, or choosing a different retailer.

The draft policy will be open for public comment for 30 days once published in the Federal Register. This situation may necessitate that businesses, particularly those operating in online retail and service sectors, re-evaluate their data usage and pricing strategies. Several states, including New Jersey and New York, have already enacted legislation related to pricing based on personal data, indicating the growing significance of this issue across the United States.