Businesses beware: If you are using a consumer’s personal data to tailor individual prices, failing to clearly and conspicuously disclose that practice may trigger Federal Trade Commission (FTC) scrutiny.
With its proposed enforcement policy statement issued last week, the FTC has jumped into the ongoing debate regarding the use of personalized pricing (sometimes more nefariously called “surveillance pricing”), suggesting it will take an “aggressive” stance against businesses whose pricing practices may constitute unfair or deceptive acts under Section 5.
The proposal does not ban personalized pricing outright – and the FTC has not been given that authority by Congress. However, the statement signals a hard-line enforcement posture focused on transparency and consumer expectations.
What Is Personalized Pricing?
Personalized pricing refers to the practice of using consumer-specific data, including browsing history, purchase history, location, demographics, or other behavioral signals, to predict how much a particular consumer is willing to pay for a good or service and then adjusting prices for that consumer accordingly. Unlike more traditional dynamic pricing, driven by supply and demand (think hotel prices that rise over graduation weekend, airline prices that escalate during peak vacation weeks, or Taylor Swift tickets anytime), personalized pricing is based on characteristics and behaviors specific to and associated with an individual customer. It has more of a Big Brother feel (hence the term “surveillance pricing”) rather than just up and down fluctuations for all consumers.
The FTC’s Proposed Enforcement Position
For now, the FTC seems focused on disclosure rather than prohibition. Importantly, Chairman Andrew Ferguson emphasized that the agency does not believe it currently has authority from Congress to ban personalized pricing in all circumstances. Instead, the FTC takes the position that the failure of a company to clearly and conspicuously disclose to a consumer not only when pricing is personalized, but also the basis for that personalization and the categories of data being used, may violate Section 5 of the FTC Act. This position is in line with this FTC’s focus on working within the four corners of the FTC Act.
The agency seems poised to enforce personalized pricing under both the deceptive and unfair prongs of the statute. For example, the statement suggests that retailers may violate Section 5 if they represent, expressly or by implication, that a price is static or widely offered when, in fact, it is personalized or if they mislead a consumer as to the basis for the personalization. The statement further suggests that allowing a consumer to pay a higher price based on undisclosed personalized pricing practices may constitute a substantial injury to a consumer.
The FTC is currently seeking public comment on the proposal during a 30-day comment period, which will kick off officially once the notice is published in the Federal Register.
Why the FTC Is Concerned
The proposal builds on the FTC’s continued interest in personalized pricing practices. In January 2025, FTC staff released preliminary findings indicating that retailers and third-party intermediaries were using a wide range of consumer information to tailor prices and promotions, including location data, demographics, browsing patterns, shopping history, and even website interaction data such as mouse movements. The FTC has also previously expressed concern that consumers may have little ability to avoid higher prices when they are unaware that personalization is occurring. Whereas informed consumers might take steps, such as using private browsing tools, VPNs, or avoiding certain retailers altogether, if they were aware that their personal data was being used to determine a price, without clear disclosures, consumers may not realize that the price displayed to them differs from the price offered to someone else. (Of course this concern really focuses on protecting the hapless consumer who may end up paying more, notwithstanding a potential willingness to do so. It also ignores the fact that with personalized pricing some consumers may actually pay less for a good or service. And this is the point: If a seller can capture a higher price point from relatively price-insensitive consumers, the seller can also drop pricing for others who may not have bought at the one-size-fits-all price, thus selling more overall based on each purchaser paying the right price for them. But we digress. . .)
Broader Regulatory Momentum
The FTC’s proposal does not exist in a vacuum. As we previously wrote, several states, including Maryland, Connecticut, and New Jersey, have already passed legislation requiring disclosures and prohibiting certain personalized pricing; while others, such as New York and California, have similar legislation pending. Additionally, there are proposals related to personalized pricing in both houses of Congress.
Key Takeaways for Businesses
The FTC’s proposed policy statement suggests that the central compliance question may shift from whether a company engages in personalized pricing to how openly it communicates those practices. Businesses that leverage AI-driven pricing tools, customer analytics platforms, or third-party pricing technologies should carefully evaluate whether their disclosures accurately reflect how consumer data influences pricing decisions. These businesses should also consider whether their customers will view such practices as desirable and how much information they want to impart.
Although the proposed policy statement does not create new law, it offers an important window into the FTC’s enforcement priorities. Companies that rely on consumer data to optimize pricing strategies should expect continued scrutiny from regulators, lawmakers, and consumer advocates, particularly where pricing decisions are opaque or difficult for consumers to detect. This is in line with this FTC’s focus on “kitchen table issues” that affect the pockets of American consumers.
Looking Ahead
The FTC’s latest move underscores a broader trend in privacy and consumer protection enforcement: Transparency is increasingly viewed as a baseline requirement when businesses use personal data in ways that materially affect consumers. As personalized pricing technologies become more sophisticated, organizations should anticipate heightened expectations around disclosure, governance, and accountability. Whether the FTC’s proposal ultimately leads to formal enforcement actions or additional rulemaking, one message is already clear: The era of invisible surveillance pricing is facing growing regulatory resistance.
