FTC Proposes Enforcement Policy on Personalized Pricing

The U.S. Federal Trade Commission has proposed a new enforcement policy statement targeting personalized pricing, also known as "surveillance pricing," where companies use consumer data to set individualized prices. The FTC plans to use its authority under Section 5 of the FTC Act to challenge practices it deems deceptive or unfair. According to the proposal, failing to clearly and conspicuously disclose that prices are personalized based on user data could be considered a deceptive act, particularly when consumers reasonably expect static pricing. The policy also notes that misrepresenting a personalized price as a discount could be misleading. This federal initiative adds a significant layer of risk for companies employing algorithmic pricing, complementing a growing patchwork of state laws that already restrict or require disclosure of such practices. A final FTC policy could also guide interpretations of state consumer protection statutes, potentially increasing private litigation exposure. Companies using these technologies should evaluate their customer disclosures and data-collection consents. The proposed policy is open for public comment.