Companies that secretly vary prices based on how much they think individual customers will pay could face federal charges under a proposed policy released Wednesday by the Federal Trade Commission.
"When consumers see a listed price, they expect it to be 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 statement.
The FTC has had its eye on personalized pricing for several years. In a preliminary report filed in January 2025, the agency found that grocers, clothing companies and others were using third-party companies to help them individualize online prices based on shoppers' locations, browsing histories and other factors, including how long they left items in their virtual shopping carts.
In one hypothetical example cited by the FTC, a consumer profiled as a new parent might be shown higher-priced baby thermometers on the first page of their search results. Ferguson said the FTC doesn't have the legal authority to ban personalized pricing in all circumstances, but businesses would need to "clearly and conspicuously disclose" if they are engaging in the practice and share the types of data used to set those prices.
What the Left Is Saying
Consumer advocacy groups welcomed the proposal but argued it didn't go far enough. The organization Consumer Reports said Wednesday that the FTC's action was encouraging but might still require consumers to read detailed disclosures while shopping online. The group said the FTC and Congress should instead follow states' lead and ban companies from using customer data to personalize prices in the first place.
"Consumers shouldn't have to hunt through fine print to understand how much they're really being charged," a Consumer Reports spokesperson wrote in a statement. "The real solution is to prohibit this practice entirely."
Several Democratic-led states have already moved to restrict personalized pricing at grocery stores, including Maryland, Connecticut and New Jersey, which passed laws prohibiting the practice. California and New York are also considering legislation that would ban personalized pricing based on customer data.
What the Right Is Saying
Retail trade groups said Wednesday they were still reviewing the proposal but emphasized their commitment to transparency in loyalty programs. The National Retail Federation, representing companies including Walmart, Target and Macy's, said retailers want to preserve incentives like loyalty and rewards programs, which collect personal data and provide tailored offers.
"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," said David French, NRF's executive vice president of government relations.
The Retail Industry Leaders Association, representing Best Buy, Home Depot, Dollar General and more than 200 other retailers, cited its own letter sent to U.S. senators earlier this month arguing that retailers don't use consumers' personal data to increase prices because doing so would jeopardize customer loyalty. "As shoppers demonstrate an increased willingness to seek out lower prices, competition among retailers intensifies to meet customers' needs," the association wrote.
FMI, a trade group for the grocery industry, said it was reviewing the proposal and hoped to preserve shopper loyalty programs while noting that electronic shelf labels increasingly common at grocers do not automatically change prices based on individual shoppers.
What the Numbers Show
The FTC's January 2025 preliminary report found that grocers, clothing companies and other retailers were using third-party firms to individualize online prices for customers based on multiple factors. The proposed policy would require businesses engaged in personalized pricing without proper disclosure to potentially face violations of the FTC Act, which prohibits unfair or deceptive practices.
The FTC is seeking public comment on the proposal for 30 days before finalizing any policy. Three states have already enacted laws prohibiting personalized pricing at grocery stores: Maryland, Connecticut and New Jersey.
The Bottom Line
The FTC's proposed policy represents the agency's latest effort to address algorithmic pricing practices that have drawn scrutiny from consumer advocates and lawmakers in both parties. If finalized, businesses would need to clearly disclose when they use customer data to set individualized prices rather than a single listed price.
Industry groups are expected to submit comments during the 30-day period arguing that loyalty programs provide value to consumers through personalized discounts. Consumer advocates are likely to push for stronger protections, pointing to state-level bans as a model for federal action. The proposal does not ban personalized pricing outright but could set the stage for enforcement actions against companies deemed to have engaged in deceptive practices without proper disclosure.