The Federal Trade Commission (FTC) is seeking public input on a proposed policy statement that could limit personalized pricing, a practice where businesses use customer data to set individual prices. While the FTC acknowledges it cannot outright ban personalized pricing, it believes it can penalize companies that fail to disclose how personal data influences prices. FTC Chair Andrew Ferguson stated that businesses might violate the FTC Act if they misrepresent prices as static when they are, in fact, personalized.
The agency's proposed policy suggests that personalized pricing could be deemed deceptive if a seller misrepresents a price as widely available when it is actually tailored to an individual. The FTC also wants businesses to disclose the data used for personalized pricing and obtain consent for data collection. This aims to prevent consumers from being misled into paying higher prices based on factors like disposable income or shopping habits with other firms, and to allow them to avoid data collection.
Examples provided by the FTC of potentially deceptive practices include a food delivery service raising prices for a customer based on their inability to leave home, a grocery chain charging a family more for milk due to data indicating they have more children, or a hotel charging a higher rate to someone traveling for a funeral. Even practices in the rideshare industry, such as charging more if a customer does not have rival apps installed, could be considered deceptive.
Public comments submitted so far indicate a majority favor strong FTC regulation of personalized pricing, with many viewing it as discriminatory and an "egregious affront to consumer privacy." Commenters suggested that low-income individuals, young people, and seniors are particularly at risk. Some also urged the FTC to ensure that factors like race or gender are not used in pricing algorithms.
However, some commenters expressed concerns that the FTC's approach might be misguided. Data privacy attorney Blake Hunter Yagman warned that unchecked data collection for pricing contributes to mass surveillance. Another commenter, Deymond Lashley, argued that the FTC's proposed scope might be too broad, potentially threatening discounts that customers rely on, and suggested the FTC is rushing rulemaking.
