The Federal Trade Commission lacks the authority to ban personalized pricing outright, but it believes new limits could police the practice. The agency has proposed a policy statement that would require businesses to disclose when a customer’s data is used to set an individual price, and it is now weighing public comments that range from demands for a ban to warnings that the rules could eliminate discounts.
In a request for public comment on a proposed policy statement, the FTC acknowledged that personalized pricing is common in some industries. Chair Andrew Ferguson said new industries are increasingly tracking customers to set individualized prices, blindsiding consumers who expect a listed price in markets like retail ‘to be the same price that everyone else sees.’
Ferguson stressed that the agency lacks the legal power to ban personalized pricing in all circumstances. ‘Businesses that fail to tell consumers how their personal data is being used to set a price may be in violation of the FTC Act and other laws we enforce,’ he said. The public has 30 days to submit comments on the proposed enforcement change.
The FTC’s policy statement notes that there is little economic research on how personalized pricing affects consumers and how widely it is used. However, it warns that the rise of data driven personalized pricing could transform what has historically been relatively limited variation in prices from one consumer to the next, potentially propping up more monopolists. Existing research suggests that while personalized pricing likely increases business profits, benefits to some consumers come with losses to others, and as the practice becomes more sophisticated, consumers are less likely to benefit.
Under the FTC’s plan, personalized pricing could violate the FTC Act when a seller misrepresents a price as static or widely available when it is actually personalized. The agency argues this is misleading because customers who understand how prices are set could take defensive measures, such as using private browsing or a VPN to mask their browsing history, or avoiding sites that use personalized pricing altogether. The FTC also wants businesses to disclose what data is used to set an individual’s price and obtain consent to collect data for that purpose.
The agency gave examples of practices that could be considered deceptive: a food delivery service raising prices because its data shows a customer may be unable to leave home, a grocery chain charging a family more for milk because data reveals they have more children, or a hotel quoting a higher price after learning a guest is traveling for a funeral and has few nearby options. Even in industries where personalized pricing is more expected, like rideshare, the FTC said it could be deceptive if Uber charged a customer more after determining no rival rideshare apps were installed on the person’s phone.
Public comments so far show that dozens of Americans have submitted views, with the majority wanting heavy regulation of personalized pricing, which they view as discriminatory. Commenters described the practice as ‘atrocious’ and ‘abhorrent’ and an ‘egregious affront to consumer privacy and protections.’ They worried most about low income people, ‘naïve young people,’ ‘poor people with limited access to information,’ and ‘trusting seniors.’ At minimum, commenters said, the FTC should ensure that race, gender, religion, or sexual preferences cannot be used as factors. Most agreed the practice should be ended to the furthest extent possible.
One anonymous commenter asked, ‘What is the point of trying to build a stable financial life if the cost of goods and services is no longer tied to a broader market but to a single person?’ Another supportive commenter, Sarah Burdell, said: ‘This practice undermines fair markets by replacing transparent pricing with hidden, data-driven discrimination between buyers.’ She added that ‘consumers cannot verify whether they are receiving a fair price, eroding trust in commerce.’ She also said: ‘Those with less time, technical literacy, or resources to detect and circumvent these practices bear a disproportionate burden. Moreover, because pricing algorithms often rely on data correlated with race, gender, age, or geography, personalized pricing risks reproducing discriminatory outcomes even absent explicit intent, potentially violating consumer protection and anti-discrimination principles.’
But some commenters argued the FTC’s approach is either too narrow or too broad. Data privacy attorney Blake Hunter Yagman, who said he has represented plaintiffs in both surveillance pricing and surveillance wage cases, warned that allowing surreptitious data collection to go unchecked is quickly increasing mass surveillance. Another commenter said the practice ‘turns routine consumer data collection into an extractive pricing weapon.’ Yagman urged more action, suggesting the policy statement’s scope should also penalize surveillance wage schemes.
Deymond Lashley took the opposite view, saying the scope is too broad and may threaten discounts customers rely on. He noted that some customers are offered lower prices through personalized pricing, and he accused the FTC of rushing rulemaking and making assumptions about what customers reasonably expect at checkout. Lashley suggested the FTC could ‘shape the future of commerce’ by restricting personalized price discrimination in ways that limit competition, while not applying the same restrictions to other forms of price discrimination like loyalty rewards programs or coupons. He argued that some businesses that could benefit from personalized pricing may be less likely to succeed if the FTC intervenes too much.
Jessie Shettleroe agreed that discounts could be lost. She called the conduct described in the FTC’s examples plainly predatory but said the FTC should slow down and sharpen the policy to ensure the most financially vulnerable consumers aren’t unexpectedly hit with higher costs. ‘I would support the Commission going after all of it, hard,’ Shettleroe said. ‘My concern is that this Proposed Statement will not accomplish that, and may make things worse for consumers like me.’
Shettleroe criticized the FTC’s required disclosures as legitimizing the practice. The policy statement ‘describes conduct that outrages people, then offers a remedy that permits it with a notice attached. I do not want a disclosure. I want the practice prohibited where it is clearly exploitative.’ She argued that most people won’t read those disclosures, reducing the FTC’s intervention ‘to a compliance checkbox, not consumer protection.’ Instead, she said, the FTC should require businesses to provide an opt-out, which might ‘do more for consumers than every disclosure in this document combined.’ Another commenter suggested requiring businesses using surveillance pricing to allow buyers to negotiate prices.
Shettleroe also warned that the FTC’s ‘undefined scope’ of what counts as personalized pricing could threaten discounts that shoppers rely on. ‘Nowhere does the Commission define “personalized pricing,”‘ she said. ‘The operative phrase is prices that “vary based on their personal data.” That covers my grocery loyalty card, emailed coupons, and app-only prices. Those save me money. If businesses cannot tell which practices are covered, the safe response is to stop personalizing altogether, and the first thing to disappear will be the discounts, not the surcharges. Please state explicitly that loyalty and membership pricing, coupons, promotional codes, and randomized price testing are outside the scope.’
The FTC may look to Congress for help refining the policy statement. Only Congress can ban personalized pricing, and a bill, the Stop AI Price Gouging and Wage Fixing Act, has been introduced in the House of Representatives. If passed, the law would prohibit certain uses of algorithmic decision systems to inform individualized prices and wages. The bill includes carve outs for long used discounts, including exceptions for discounted prices offered to broadly defined groups such as teachers, veterans, senior citizens, or students based on publicly disclosed eligibility criteria, as well as discounts offered through loyalty, membership, or rewards programs that consumers affirmatively enrolled in.
The comment period remains open, and the FTC will decide whether to adopt the policy statement. The outcome could reshape how businesses use personal data to set prices, determining whether consumers who benefit from personalized discounts get to keep them.
