Andrew Ferguson announced that the Federal Trade Commission is seeking public comment on a new enforcement policy aimed at making retailers disclose the use of personal data to set individual prices. The agency says that failing to inform consumers could breach the FTC Act's ban on unfair or deceptive practices.
What the FTC proposal entails
The FTC defines personalised pricing as the practice of using a shopper's location, demographics, credit history, browsing or purchase history, even mouse movements, to estimate how much they are willing to pay. Under the draft rule, companies that set prices in this way would have to clearly inform consumers that their data is being used for pricing decisions.
"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," said Andrew Ferguson in a press release.
The FTC does not claim authority to ban personalised pricing outright, but it warns that hidden use of data could be deemed an unfair practice.
Why the move matters
Earlier this year the commission ordered eight pricing-technology firms to reveal how they combine data such as precise location, browsing history and credit information to advise retailers on price points. Former chair Lina M Khan called the practice "surveillance pricing" and said Americans deserve transparency.
"Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing," Lina M Khan said at the time.
Consumer groups argue that personalised pricing can exacerbate the impact of inflation, especially on low-income households that already spend a large share of their income on food. Recent data from the US Bureau of Labor Statistics show fruit and vegetable prices up 5.1% year-on-year, while non-alcoholic beverages rose 4.1%.
What happens next
The FTC has opened a comment period that runs until 18 September. Businesses, consumer advocates and other stakeholders can submit written feedback. After the comment window closes, the commission will consider the input before finalising the rule, which could lead to new enforcement actions against retailers that fail to disclose personalised pricing practices.
Retailers that rely on dynamic pricing engines, which adjust prices based on inventory, demand and competitor rates, will need to assess whether their systems also incorporate personal data and, if so, how to meet the forthcoming disclosure requirements.