FTC proposes enforcement against undisclosed personalized pricing

The Federal Trade Commission (FTC) has proposed an enforcement policy statement targeting undisclosed personalized pricing. This practice involves companies using consumer data—such as browsing activity and purchase histories—to set individualized prices, discounts, coupons, or loyalty incentives based on a customer's perceived willingness to pay.

While the FTC noted it cannot prohibit personalized pricing outright, it warned that failing to disclose how personal data is used to determine these prices may violate Section 5 of the FTC Act, which prohibits unfair or deceptive business practices. The proposed policy suggests that businesses must provide clear and conspicuous disclosures regarding the fact that pricing is personalized, the basis for that personalization, and the specific types of data being utilized.

FTC Chairman Andrew Ferguson stated, “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.” The commission voted 2-0 to authorize the publication of this proposal in the Federal Register, opening a 30-day window for public comment.