FTC puts retailers on notice over personalized pricing
Companies are warned not to use data their have gathered about individual consumers unlawfully.
- The FTC says companies may violate federal law if they secretly use consumers’ personal data to decide how much each shopper should pay.
- The practice — sometimes called personalized or surveillance pricing — can use browsing history, location, shopping habits and other data to estimate an individual consumer’s willingness to pay.
- The agency says it cannot simply outlaw personalized pricing, but misleading consumers about how prices are set could constitute an unfair or deceptive practice.
The price you see online may increasingly depend not just on what you are buying, but on what a retailer knows — or thinks it knows — about you.
The Federal Trade Commission is proposing an enforcement policy aimed at a growing practice known as personalized pricing, in which businesses use personal information to estimate how much an individual consumer is willing to spend and adjust prices accordingly.
The FTC said Wednesday that companies may run afoul of federal consumer-protection law when they engage in such pricing without telling shoppers what is happening.
“When consumers see a listed price, they expect it to be same price that everyone else sees, not the retailer’s estimate of how much they are willing to pay based on their personal data,” FTC Chairman Andrew Ferguson said in a news release.
The agency acknowledged an important limitation: It does have authority to prohibit personalized pricing in every circumstance. Some states, notably Maryland, have outlawed the practice and others are considering it.
The FTC's proposed policy focuses heavily on deception and disclosure. A company that leads consumers to believe a displayed price is generally available when the price actually varies from person to person may violate the FTC Act, the commission said. The undisclosed collection or use of personal information for personalized pricing could also constitute an unfair or deceptive practice.
That distinction could become increasingly important as artificial intelligence and enormous databases of consumer information make it possible to move beyond traditional “dynamic pricing.”
James R. Hood
Dynamic pricing isn't necessarily personalized pricing
Consumers are already accustomed to prices changing.
Airfares rise as flights fill. Hotel rates jump during conventions. Ride-share fares increase when demand suddenly exceeds the number of available drivers.
Those are forms of dynamic pricing generally based on market conditions.
Personalized pricing is potentially something quite different: Two people shopping at roughly the same time for the same product may be offered different prices because a computer has drawn different conclusions about them.
The FTC describes personalized pricing as using personal data to determine what a company thinks an individual consumer is willing to pay.
That data could potentially include location, browsing history, previous purchases and other behavioral information. And companies have access to increasingly detailed signals.
An FTC investigation launched in 2024 found that pricing intermediaries could use information ranging from precise location and shopping history to what consumers leave sitting in an online shopping cart — and even how they move a mouse across a webpage.
The companies examined by the FTC worked with at least 250 businesses selling products and services including groceries and clothing.
How personalized pricing could work
The concern isn't necessarily that a website will announce:
“This item costs $79.99 for you and $64.99 for everyone else.”
The differences can be much harder to detect.
FTC researchers said pricing technology could be used to decide which consumers receive promotions or discounts, which products appear prominently in search results and potentially what price a shopper sees.
One hypothetical example cited by the agency involved a consumer identified as a new parent being shown more expensive baby thermometers higher in search results.
A merchant could also theoretically conclude that someone who repeatedly visits a product page is unusually interested in the item — and therefore less likely to walk away from a higher price.
That possibility is one reason the FTC says disclosure matters. A consumer who knows personalized pricing is being used might clear cookies, browse privately, use a VPN, compare prices on another device or simply shop elsewhere, the commission said.
Groceries provided an early warning
The issue became much more tangible after a Consumer Reports investigation of Instacart pricing.
Consumer Reports and its partners found that shoppers purchasing identical groceries from the same stores could encounter price differences of as much as 23% on individual items during Instacart pricing experiments.
Instacart disputed characterizations of the experiments as surveillance pricing and said retailers, rather than Instacart, controlled prices. The company later ended the item-price testing program, AP News reported.
The episode nevertheless demonstrated how difficult it can be for consumers to know whether the price on their screen is really the price.
California Attorney General Rob Bonta subsequently launched an investigative sweep into businesses' use of personal data to set individualized prices, particularly in the grocery, retail and hotel industries.
New York has gone further legislatively.
Its Algorithmic Pricing Disclosure Act, which took effect Nov. 10, 2025, requires businesses covered by the law to tell consumers when a price was set by an algorithm using their personal data.
A surprisingly bipartisan issue
The FTC's latest move also illustrates how concern about personalized pricing has survived the change in presidential administrations.
The commission began its surveillance-pricing investigation in 2024 under then-Chair Lina Khan.
Ferguson, who became chairman under President Trump, criticized portions of the previous commission's work on the subject. But the FTC he now leads is signaling that undisclosed personalized pricing can still warrant enforcement.
“The FTC does not have the legal authority to ban personalized pricing in all circumstances,” Ferguson said, but businesses that fail to tell consumers how their data is being used “may be in violation of the FTC Act and other laws we enforce.”
The commission voted 2-0 to seek public comment on the proposed enforcement policy.
The bigger issue: What exactly is a price?
For consumers, personalized pricing raises a question that online commerce has largely avoided answering:
When a retailer displays a price, what does that price actually represent?
Traditionally, a shopper could reasonably assume that a $40 toaster cost approximately $40 for anyone walking into the store at that moment.
Digital commerce changes that assumption.
A computer can potentially know that one shopper has searched repeatedly for the toaster, lives in an affluent ZIP code and rarely abandons purchases over price.
Another shopper may routinely comparison-shop and wait for discounts.
If algorithms conclude the first shopper will tolerate $44 while the second will buy only at $36, personalized pricing technology provides retailers with a way to act on that information.
Economists have long called variations of that strategy price discrimination — charging different customers different amounts based on their willingness to pay.
What is new is the extraordinary amount of personal information that can now be fed into the calculation, often without the shopper knowing it is happening.
That is where the FTC appears prepared to draw its enforcement line.
Companies may have considerable freedom to change prices.
They may have considerably less freedom to secretly change the price because of who the computer thinks you are.
The FTC's proposal will be open for public comment for 30 days after it is published in the Federal Register.
