FTC says "personalized pricing" based on consumer data could violate law
Summary
The Federal Trade Commission (FTC) warns companies that using personal data to set different prices for shoppers could break the law if they do not clearly explain it. The FTC says people expect prices to be the same for everyone, whether in stores or online. Companies must disclose if they use customers’ data to decide prices or risk being disciplined.Key Facts
- The FTC released a policy statement cautioning companies about "personalized pricing" based on consumer data.
- Personalized pricing means charging different prices based on a customer’s online habits or purchase history.
- Consumers usually expect prices to be the same for all shoppers, both in stores and online.
- The FTC cannot ban personalized pricing but can penalize companies that do not disclose how they use personal data for pricing.
- Examples of possible violations include charging more because of household size, trip urgency, or medical emergencies.
- Consumers can try to avoid personalized pricing by using tools like VPNs or private browsers.
- Consumer Reports found Kroger collects detailed shopper data for profiling, and Instacart charges different prices for the same items.
- The FTC wants companies to clearly say when prices are based on a customer’s estimated willingness to pay.
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