The Federal Trade Commission stated on Wednesday that it would require U.S. businesses to disclose when and how they personalize prices for their customers, according to a report published August 21. The agency wants retailers and other businesses to disclose when they tailor prices or discounts to individual customers and explain what personal data was used to do so. While the proposal does not include an outright ban on personalized pricing, the agency indicated it may crack down more broadly on the practice under existing federal consumer protection law.
Personalized pricing occurs when a company tailors the price for a product or service to individual shoppers or small groups using various data sources. These sources can include shopping history, billing ZIP code, geolocation data, and information from loyalty programs. The FTC's eight-page statement marks the clearest stance the federal government has taken on the practice, which has come under scrutiny following reports that companies like Home Depot, Instacart, Kroger, Target, Uber, and Lyft charge different customers different prices for the same products and services.
In a statement, FTC Chairman Andrew Ferguson said that when consumers see a listed price, they expect it to be the same price that everyone else sees, rather than a retailer's estimate of what a customer is willing to pay based on personal data. The agency's proposal suggests that businesses should clearly and conspicuously disclose that a price is personalized, the basis for that personalization, and the types of data used to determine it.
The proposal has met with varying reactions from industry representatives. David French, the executive vice president of government relations for the National Retail Federation, stated the group would aggressively advocate to protect programs that deliver personalized offers and savings. Drew Ambrogi, a policy manager for the tech industry group Chamber of Progress, suggested the FTC should focus on data-driven price hikes rather than personalized discounts that save consumers money.
While the FTC lacks the legal authority to ban personalized pricing outright, it noted that the undisclosed use of personal data for this purpose could violate the FTC Act by constituting an unfair or deceptive practice. The agency noted that failing to make these disclosures would likely be considered a violation of the act and stated it would deploy enforcement resources accordingly.
The proposed disclosure requirement is expected to take effect sometime in 2027. The FTC's statement has been published in the Federal Register, and the public has until September 18 to submit comments for review by the commission.
