Personalized pricing is “abhorrent,” but FTC limits may increase costs, critics say
The US Federal Trade Commission is considering new limits on "personalised pricing," the practice of using customers' personal data to set individualised prices based on how much they might be willing to pay. While the FTC lacks authority to ban the practice outright, it says businesses could be found in violation of the FTC Act if they fail to disclose when prices are personalised, prompting concern from critics that such rules could inadvertently raise costs or eliminate discounts consumers currently benefit from.
Under the proposal, outlined by FTC Chair Andrew Ferguson, companies would need to avoid misrepresenting personalised prices as static or widely available, disclose what data is used to calculate an individual's price, and obtain consent before collecting data for pricing purposes. The FTC argues this would let consumers take defensive steps, such as browsing privately or using a VPN, or dispute inaccurate data affecting their prices, and warns that unchecked personalised pricing could deepen inequities between consumers over time. The agency acknowledged a lack of solid economic research on the practice's overall impact and opened a 30-day public comment period on the plan.
- FTC proposes disclosure rules for personalised, data-driven pricing practices
- Businesses would need consent and transparency on pricing data use
- Critics fear rules could raise prices or end discounts instead
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Personalised pricing is when a business uses information about a customer to set a price for them individually, rather than offering the same price to everyone. The information might include a person’s browsing or buying habits and could be used to estimate how much they are willing to pay.
In the US, the Federal Trade Commission is the agency that enforces laws against unfair or deceptive business practices. Its authority does not extend to banning personalised pricing outright, but it can act if a company misleads customers about how prices are set or what information it uses.
The debate matters because individual prices could mean some people pay more while others receive discounts, and the effects are not yet well understood. Rules requiring companies to explain their pricing could help customers make informed choices, while critics say compliance costs might reduce discounts or raise prices.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Personalised pricing, when undisclosed, exploits information asymmetries that disadvantage less sophisticated consumers who remain unaware whilst companies charge different prices based on perceived willingness to pay. This practice disproportionately harms economically vulnerable populations and threatens to deepen inequality over time. Transparency requirements and consent mechanisms would allow consumers to make informed choices, challenge inaccurate data affecting their prices, and take protective measures, addressing fundamental fairness concerns without preventing beneficial discounting.
The case against
Whilst transparency has merit, strict disclosure and consent requirements risk eliminating personalised discounts that currently benefit many consumers, particularly price-sensitive shoppers who gain from targeted promotions. Dynamic pricing and individualised discounts already drive competitive innovation and deliver real savings; the FTC itself acknowledged insufficient economic evidence of the practice's overall harm, yet proposes regulations that could force companies to abandon beneficial strategies entirely. Rather than protecting consumers, mandatory requirements may simply remove targeted discounts whilst leaving standard prices unchanged or higher.