The Federal Trade Commission is moving to ensure companies disclose use of customers’ personal data to set prices, as technology makes it easier for retailers to tailor them to individual shoppers.
The FTC said that it is seeking public comment on an enforcement policy statement concerning “personalized pricing,” which the agency defines as using personal data to determine how much a company believes an individual consumer is willing to spend. The proposal would warn companies that failing to disclose that they are using personal data to set prices could violate the FTC Act’s prohibition on unfair or deceptive practices.
“When consumers see a listed price, they expect it to be the 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 press release. “The FTC 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.”
The FTC did not immediately respond to a request for comment from Fortune. The proposal is open for public comment through Sept. 18.
The regulator’s action comes after more than two years of scrutiny into what it calls “surveillance pricing.” In July 2024, the FTC ordered eight companies involved in pricing technology to provide information about how they use customer data—including location, demographics, credit history and browsing or shopping history to help companies determine prices.
“Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing,” then FTC Chair Lina M. Khan said at the time, “and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The FTC’s January 2025 findings said pricing intermediaries could use information ranging from a consumer’s precise location and browser history to shopping behavior and even mouse movements to help retailers tailor prices or promotions. The agency said the companies it examined had worked with at least 250 clients, including grocery retailers.
The deep dive into personalized pricing comes after the FTC recently flagged dynamic pricing—or setting prices based on supply and demand as well as inventory levels and competitor pricing.
An FTC research document noted that companies using e-commerce websites or electronic shelf labels could potentially make price changes with similar frequency.
“Consumers expect prices for products and services to change based upon supply and demand, not their web surfing habits or buying history,” it noted. “Retailers who represent or imply that a price is static when it in fact varies by individual are at risk of misleading customers.”
The distinction is becoming more significant as consumers contend with years of elevated inflation, including higher grocery bills. In July, prices for fruits and vegetables rose 5.1% from a year ago, while nonalcoholic beverages rose 4.1%, according to the Bureau of Labor Statistics.
Food costs also take up a disproportionate amount of spending in lower-income American households. In 2024, those in the lowest quintile spent an average $5,498 on food—equivalent to 33% of their pretax income—compared to 12.2% for households in the middle income quintile, according to the USDA.
This story was originally featured on Fortune.com
