FTC Requires Disclosure of Personalized Pricing Practices

The Federal Trade Commission voted 2-0 to release a draft enforcement policy statement requiring businesses to clearly and conspicuously disclose if they use personalized pricing, also known as surveillance pricing. This practice uses algorithms to set individual prices based on a consumer's browsing history, location, device type, and shopping habits to estimate their willingness to pay.

FTC Chairman Andrew Ferguson stated that consumers expect listed prices to be uniform rather than based on a retailer's estimate of what a specific customer will pay. While the agency noted it lacks the authority to ban personalized pricing entirely, it warned that failing to disclose these practices could violate the FTC Act's prohibitions on unfair or deceptive marketplace practices. The commission cited potential violations such as charging higher rates for ride-hailing to hospitals or hotel rooms for funeral attendees.

Consumer Reports described the move as encouraging but urged a total prohibition on using individual data for price personalization. Conversely, the National Retail Federation and the Retail Industry Leaders Association defended the use of personal data for loyalty and rewards programs, denying that such data is used to increase prices. The proposed policy is now open for public comment for 30 days. This federal action follows similar laws already enacted in states including Maryland, Connecticut, and New Jersey.