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In some cases, the agency says non-disclosure may be illegal

By Mark Huffman of ConsumerAffairs

• The FTC is warning retailers that secretly using consumers personal data to determine the prices they see could violate federal consumer protection law.

• The agency says retailers should clearly disclose when prices are personalized and what types of consumer data are being used.

• The proposal follows an FTC investigation into surveillance pricing, which can draw on information such as location, browsing history, purchases and online shopping behavior.

Congress has yet to act on legislation to outlaw surveillance pricing, but the Federal Trade Commission is warning retailers that quietly use consumers personal information to decide how much they should pay could run afoul of federal consumer protection law.

The FTC released a proposed enforcement policy this week aimed at so-called personalized or surveillance pricing, in which businesses use information about individual shoppers to determine the prices or offers they see.

The agency said companies should clearly tell consumers when a price has been personalized and explain both the basis for the personalization and the types of personal data used. Failing to make those disclosures could constitute an unfair or deceptive practice under Section 5 of the FTC Act, according to the proposal.

The FTC stopped short of seeking an outright prohibition. Chairman Andrew Ferguson said the commission does not have authority to ban personalized pricing in all circumstances. Instead, the proposal puts retailers on notice that secretly using personal data to alter prices could trigger enforcement action.

The concern is that increasingly sophisticated data collection and pricing technology could let a business estimate how much a particular shopper is willing to pay without the shopper knowing that someone else may be seeing a different price.

When consumers see a listed price, they expect it to be the same price that everyone else sees, not the retailers estimate of how much they are willing to pay based on their personal data, Ferguson said in announcing the proposal.

Browsing history, location and even abandoned carts could matter

The warning follows a multiyear FTC examination of surveillance pricing.

In January 2025, FTC staff reported that pricing intermediaries had access to a wide range of consumer information that could be used to tailor prices and promotions. That information can include a shoppers precise location, demographics, browsing and purchase history and even behavior such as mouse movements or products left behind in an online shopping cart.

The agency offered a hypothetical example in which a consumer identified as a new parent could be shown higher-priced baby thermometers more prominently based on that profile.

The FTC began investigating the industry in 2024, issuing information demands to companies that offered pricing products incorporating artificial intelligence, algorithms and consumer data. The inquiry sought to understand how those systems were being used and their potential effects on privacy, competition and consumers.

The new proposal draws an important distinction between personalized pricing and more familiar forms of changing prices.

A price that rises for everyone because demand increases, for example, isn't necessarily personalized. Nor does the FTC's proposal automatically prohibit loyalty discounts or targeted promotions. The agency is focused on situations in which personal information about an individual influences the price that particular person sees especially when consumers have no reason to expect it.

Retailers defend loyalty programs

Retail industry groups are watching the proposal closely.

The National Retail Federation emphasized the importance of protecting loyalty and rewards programs, which routinely use customer information to provide individualized discounts and offers. The Retail Industry Leaders Association has also argued that retailers have strong competitive incentives not to use personal information to raise prices because doing so could undermine customer loyalty.

That distinction could become important as regulators determine where personalized promotions end and potentially deceptive personalized pricing begins.

For consumers, the FTC's proposal could ultimately mean more disclosure at the point of sale. If a retailer is using information about a customer's behavior or characteristics to determine the price that customer sees, the agency says simply displaying the price may not be enough.