FTC proposes enforcement policy on personalized pricing tools

The U.S. Federal Trade Commission released a proposed enforcement policy on personalized pricing, seeking to establish a position to address growing concerns around retailers' alleged data misuse to support deceptive or misleading pricing systems.

The draft policy states businesses should respect consumer privacy expectations with a pricing scheme that "clearly and conspicuously disclose not just that the price is personalized, but also the basis for that personalization and the types of data on which the personalization is based." It mentions Congress has not bestowed specific enforcement powers on the FTC, but the agency "intends to enforce aggressively against any practices associated with personalized pricing" under Section 5 of the FTC Act.

Stakeholders will have 30 days to submit public feedback on the FTC's proposed policy once it is published in the Federal Register.

In a statement, FTC Chair Andrew Ferguson said the agency "does not have the legal authority to ban personalized pricing in all circumstances, but 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."

Ferguson noted the FTC's current administration "will not hesitate to enforce the law in this space."

Prior FTC efforts

The FTC previously conducted a study of personalized pricing January 2025, finding consumers' sensitive information could be used by companies to make potentially harmful and biased decisions that affect how much consumers pay for everyday products. Former FTC Chair Lina Khan said the study found the types of sensitive data being used to set prices could include anything "from a person's location and demographics, down to their mouse movements on a webpage."

Though Khan urged the agency to expand upon the study after U.S. President Donald Trump's administration took over, Ferguson halted the FTC's subsequent request for information when he assumed FTC chair.

In his dissenting statement against the 2025 study, Ferguson thanked FTC staff for its work but characterized it as "far from a comprehensive report."

"The Commission should not be releasing staff's early impressions that 'can be outdated with new information' because the fact gathering process on the very issues being presented to the public is still underway," he added. "Publishing 'ideas' and 'initial observations' accompanied by hypothetical use cases rather than robust factual findings may undermine the trust placed in the Commission's Section 6(b) work."

Where Congress, states stand

American Economic Liberties Project Executive Director Nidhi Hegde told the The Wall Street Journal the proposed policy is "two years too late and not nearly enough," particularly given the state-level attention now being paid to the issue. Connecticut, Maryland, and New Jersey have enacted legislation banning companies' use of personalized pricing and 24 states have proposed similar measures.

Consumer Reports Senior Policy Analyst Grace Gedye called the draft statement "encouraging" while joining Hegde in highlighting the personalized pricing issue being left unaddressed for too long already.

"It should not be consumers' responsibility to read detailed disclosures on each item while shopping online to avoid being hit with a higher price," Gedye said in a statement. "Instead, the FTC, Congress, and states should take action to prohibit companies from using consumers’ individual data to personalize prices in the first place."

Congress has made recent bipartisan moves toward understanding and legislating against potentially harmful pricing tools.

During the U.S. Senate Committee on the Judiciary Subcommittee on Crime and Counterterrorism's 4 Aug. hearing, Sen. Josh Hawley, R-Mo., called personalized pricing practices "one of the biggest scams in American history," and declaring the tools the "unholy trinity of everything Americans hate: spying on people, ripping them off, and taking away jobs."

House Energy and Commerce Committee Ranking Member Frank Pallone Jr., D-N.J., also launched a committee inquiry in May requesting information from 25 companies on their alleged practices. More recently, Pallone extended the inquiry, on his own volition, to major airlines, noting he is "very concerned about companies potentially using Americans' personal data to determine what prices they see and pay.

"Consumers deserve to know if businesses are using their personal information to manipulate the prices they pay or experiment with algorithms to set the prices they see," Pallone said.

Representatives for Hawley and Pallone did not immediately respond to the IAPP's request for comment on the FTC's draft policy statement.