Personalized Pricing Raises the Stakes for Ad Practices and Consumer Privacy

The Commission voted 2-0 to authorize the statement and is accepting public comments for 30 days following Federal Register publication. The comment period ends September 25 at 11:59 PM EDT.

What Is ‘Personalized Pricing’?

The FTC defines personalized pricing as “the use of personal data to set prices according to the amount that a company believes an individual consumer is willing to spend.” Think of it as a digital storefront that rearranges its price tags the moment you walk in, reading your browsing history, purchase patterns, location data, and device information to guess exactly how much you are willing to pay, all processed at scale.

The FTC’s Position

The Commission is not claiming authority to ban personalized pricing outright. As Chairman Andrew Ferguson stated, “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 policy statement frames two core Section 5 theories:

• Deception: Retailers who represent or imply that a price is static, or simply fail to disclose that it is personalized, may be deceiving consumers acting under the reasonable expectation that the listed price is the same for everyone.

• Unfairness: Consumers cannot avoid a higher personalized price if the fact of personalization is concealed. That unavoidable injury, and absent countervailing benefits, is the hallmark of an unfair practice.

To stay on the right side of the line, a business must “clearly and conspicuously disclose not just that the price is personalized, but also the basis for that personalization and the types of data on which the personalization is based.” A vague label like “specially selected price” will not cut it.

The Examples Are Vivid — and Telling

The FTC’s illustrative scenarios read like a privacy horror show: a food delivery app charging more because data suggest the consumer cannot leave home; a grocery chain marking up milk because household data reveal several children reside there; a hotel raising rates on someone traveling to a “cannot-miss” event such as a funeral; and a rideshare service charging more for a trip to a medical facility because the user appears to have a life-threatening condition. These examples signal that the Commission views pricing based on inferred vulnerability as particularly problematic.

Privacy and Advertising Implications

The ripple effects extend far beyond the pricing team’s domain.

• Data Collection and Consent: The FTC warns that collecting, using, or disclosing personal data for the purpose of personalized pricing without adequate disclosure or consent “may violate Section 5.” Companies that purchase third-party data segments for pricing optimization face a real question about whether downstream consent covers that specific use.

• AdTech and Audience Data: The same behavioral data that powers programmatic advertising (browsing habits, app usage, geolocation) is precisely what enables personalized pricing. Businesses that repurpose advertising audiences or data-management-platform segments for dynamic pricing must consider whether their privacy notices and consent flows contemplate that use case.

• First-Party Data Programs: Loyalty programs and logged-in experiences generate rich purchase-history data. If that data informs individualized pricing, the FTC’s position suggests disclosure must accompany the personalized offer, potentially complicating frictionless e-commerce experiences.

Key Takeaways for Companies

1. Audit pricing algorithms for any inputs derived from personal data, including third-party data feeds and inferred attributes.

2. Review privacy notices and consent mechanisms to confirm they specifically address the potential use of data for pricing.

3. Assess disclosure mechanics at the point of price presentation to ensure personalized prices are clearly identified alongside the basis for personalization.

4. Monitor the comment period and final statement, which will clarify the FTC’s enforcement posture going forward.

Given the detailed effort involved in drafting the Proposed Enforcement Policy Statement, companies should treat this activity as a strong signal of FTC enforcement intent rather than an academic exercise. For more information or help with these issues, reach out to the authors or a member of the Consumer Products, Advertising & Promotions, or Privacy & Data Security teams.