Companies could soon be required to inform consumers if they use their personal data to determine the cost of goods and services, following an announcement by the Federal Trade Commission (FTC).
The FTC announced on Wednesday that it is seeking public comment on an enforcement policy statement concerning what’s known as personalized pricing.
The enforcement policy statement acknowledges the “growing public concern” about data collection being used to set different prices for individuals making the same purchases.
It also notes that although personalized pricing is not prohibited in all circumstances, unfair or deceptive personalized pricing tactics violate Section 5 of the FTC Act.
“Where consumers reasonably expect that prices for a product or service will not vary based on their personal data, businesses that engage in personalized pricing should 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,” according to the FTC policy statement. “The failure to make these disclosures is likely to constitute an unfair or deceptive act or practice in violation of Section 5. The Commission intends to deploy enforcement resources in a manner consistent with this conclusion.”
No ban, but strict enforcement
FTC Chairman Andrew Ferguson said in a press release that the commission lacks the legal authority to ban personalized pricing in all circumstances, but noted that businesses that fail to disclose the practice to the public will face prosecution.
The announcement puts businesses on notice that the administration will enforce the law, Ferguson added.
“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,” he said.
Personalized pricing exceptions
The commission’s enforcement policy statement recognizes that some prices will vary for services such as rideshare.
“Sometimes those supply-demand variations will be intensely local – for example, the prices of rideshare services can vary if the supply and demand in one neighborhood is different than in an adjoining neighborhood, as well as other factors intrinsic to the requested ride,” the FTC noted.
Variations in price also are common in different parts of the country as they are based on differences in supply and demand
“And the prices of some products necessarily vary from purchaser to purchaser because of the nature of the product – for example, the prices of insurance policies or of credit necessarily turn on a consumer’s individualized characteristics and details so that they properly reflect the risk of providing an insurance policy or loaning money to the consumer,” the FTC said.
Personalized pricing scenarios
The gray area between what is and what is not allowed can be confusing as it applies to new technology, so the FTC included a list of hypothetical scenarios where personalized pricing is used without adequate disclosure.
Those include the following:
- “A retailer charging more for a product sold on its website on the basis of data revealing that the consumer is inside one of the retailer’s physical locations of parking lots at the time of browsing the retailer’s website.”
- “A food delivery company quoting a higher price to consumers on the basis of data personal to those consumers that lead the company to believe they are less likely or unable to leave their homes to purchase food.”
- “A grocery chain charging a delivery customer a higher price for milk based on data showing that several children live in the customer’s household.”
Personalized pricing stings
While some of those scenarios may seem implausible, consumer watchdog groups have already uncovered instances of personalized pricing from large companies such as Instacart.
Consumer Reports published its investigation into personalized pricing by the grocery delivery service in December 2025.
“Analysis of the shopping data found that consumers were paying different prices for the same products from the same store at the same time,” Consumer Reports said in a prepared statement on Wednesday. “The investigation found that Instacart’s algorithmic pricing experiments could result in price differences as high as 23% for certain products and could cost families more than $1,200 a year at checkout.”
The investigation led Instacart to announce that it would end the practice of charging customers different prices for the same basket of groceries.
“We’ve listened carefully to feedback from our customers. And we understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers,” Instacart said in the announcement that it would end the personalized pricing program. “At a time when families are working exceptionally hard to stretch every grocery dollar, those tests raised concerns, leaving some people questioning the prices they see on Instacart. That’s not okay – especially for a company built on trust, transparency and affordability.”
A call to action
Consumer Reports celebrated the FTC announcement on Wednesday, but said the commission does not go far enough, and places the onus on consumers to protect themselves from companies.
The group publication argued that disclosures from companies using personalized pricing are only useful if consumers can see if they paid more, less or an average of the original price.
“Ultimately though, it should not be consumers’ responsibility to read detailed disclosures on each item while shopping online to avoid being hit with a higher price. Instead, the FTC, Congress, and states should take action to prohibit companies from using consumers’ individual data to personalize prices in the first place,” Consumer Reports said.
Three states – Maryland, Connecticut and New Jersey – have already taken action on the matter, passing state laws this year that effectively ban the practice.
