The US FTC Is Cracking Down on Personalized Pricing: What Does It Mean for Consumers?

The US Federal Trade Commission (FTC) is gathering public comment on 'personalized pricing' — setting prices based on a customer's personal data and assumptions about their willingness to pay. FTC Chairman Andrew Ferguson said in a statement issued August 19: 'When consumers see a posted price, they expect that price to be the same for everyone — not a retailer's assessment of their willingness to pay based on their personal data.'

The FTC can't ban personalized pricing outright, but it warns that companies that fail to disclose how they use customer data may be violating Section 5 of the FTC Act and other laws. The move follows Maryland's law restricting surveillance-based pricing and Connecticut's outright ban on the practice — according to law firm Holland & Knight, more than 40 similar bills have been introduced across more than 20 states.

Artificial intelligence has further supercharged personalized pricing — companies can now draw on device type, location, purchase history, income, and credit scores. An investigation by Consumer Reports and the Groundwork Collaborative into Instacart found that prices for the same item varied by as much as 23% across customers; following the investigation, Instacart stopped offering retailers technology that let them set different prices for the same item to different customers simultaneously. A separate investigation found the median gap between the lowest and highest price tiers on Uber and Lyft ran around 42%.

According to Jeannie Walters, founder of Experience Investigators, five people could see five different prices for the identical trip from the same starting point to the same destination — deepening customers' sense of unfairness. 'Trust is hard to earn and easy to lose,' Walters says, adding that research shows companies that obscure pricing end up seeing customers spend less, not more, because people want to be treated fairly. A 2024 Consumer Reports study found two-thirds of US consumers oppose the practice.

John Picoult, founder of Watermark Consulting, advises companies to evaluate any dynamic pricing strategy through the lens of fairness rather than revenue maximization before rolling it out: 'If your pricing strategy makes customers feel like they're being exploited, it's not going to end well,' he says. Among the examples cited by the FTC: raising food delivery prices based on data suggesting a customer can't leave home, or upselling a pricier home security system to someone known to have been a crime victim — both of which deepen the FTC's concerns around fairness and Section 5.