FTC proposes requiring retailers to disclose personalized pricing

The Federal Trade Commission (FTC) has unveiled a proposed policy that could lead to federal charges against companies using secret personalized pricing strategies. This policy targets businesses that adjust prices based on their assessment of an individual customer's willingness to pay, often derived from personal data. FTC Chairman Andrew Ferguson stated, "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."

The FTC has been investigating personalized pricing for several years. A preliminary report in January 2025 indicated that various retailers, including grocers and clothing companies, were employing third-party firms to individualize online prices. These adjustments were based on factors such as a shopper's location, browsing history, and even how long they hesitated before purchasing items. The FTC provided a hypothetical example where a consumer identified as a new parent might see higher prices for baby thermometers simply because of their profile.

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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.

While the FTC acknowledges it lacks the authority to ban personalized pricing outright in all situations, the proposed policy mandates that businesses must "clearly and conspicuously disclose" if they engage in this practice. Furthermore, they must share the types of data used to set these variable prices. Ferguson explained that failing to reveal personalized pricing and the underlying data could violate the FTC Act, which prohibits unfair or deceptive marketplace practices.

Retail industry groups have responded cautiously. The National Retail Federation (NRF), representing major retailers like Walmart and Target, emphasized their commitment to loyalty and rewards programs, which also utilize personal data to offer tailored deals. David French, NRF's executive vice president of government relations, stated, "NRF has and will continue to aggressively advocate to protect these programs that deliver timely savings and personalized offers that are relevant to each shoppers' interests." FMI, a trade group for the U.S. grocery industry, indicated it was reviewing the proposal. Both FMI and the NRF have previously expressed hopes of preserving shopper loyalty programs, with FMI noting that electronic shelf labels do not automatically change prices based on individual shoppers.

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NRF has and will continue to aggressively advocate to protect these programs that deliver timely savings and personalized offers that are relevant to each shoppers' interests.