FTC proposes enforcement policy on personalized pricing

The Federal Trade Commission (FTC) has issued a proposed enforcement policy statement seeking public comment on how businesses handle personalized pricing. The proposal asserts that companies failing to disclose when they use consumer data to set individualized prices for goods or services may be engaging in deceptive or unfair practices under Section 5 of the FTC Act.

The FTC suggests that where consumers reasonably expect prices to be uniform, businesses must clearly and conspicuously disclose not only that a price is personalized, but also the specific basis and types of data used for that personalization. While the commission acknowledges it lacks the authority to prohibit all forms of personalized pricing, it intends to scrutinize the lack of transparency surrounding these methodologies.

This move follows previous FTC research into what was formerly termed ‘surveillance pricing.’ While current Chair Andrew Ferguson noted that the term implies nefarious intent, the agency continues to investigate how data collection allows for individualized pricing in markets where such practices were not traditional. The proposal follows similar legislative actions in states such as New York, Maryland, Connecticut, and New Jersey.