FTC Proposes Enforcement Policy Against Undisclosed Personalized Pricing Using AI

Consumers could see lower prices, increased privacy, from FTC ruling

Consumers have been hearing about "surveillance pricing" for a while, and now the Federal Trade Commission has a plan to curtail the practice. If you have been on Instagram or TikTok recently, you've probably seen influencers telling you to purchase your plane tickets at the library or use a VPN to mask your location because of dynamic pricing that changes based on location and search frequency. But now the FTC is stepping in, proposing a new enforcement policy regarding personalized pricing, which it defines as "the use of personal data to set prices according to the amount that a company believes an individual consumer is willing to spend." While personalized pricing, which is also known by other monikers, including surveillance pricing, dynamic pricing, surge pricing, real-time pricing, and demand-based pricing, has been around for years. But it has become more invasive in recent years thanks to artificial intelligence. "AI dynamic pricing is a process where product or service prices are adjusted in real time based on various market factors and demand," according to IT solutions company Bull. "Unlike traditional models that often rely on rigid assumptions or ignore competitor actions, this solution uses Machine Learning (ML) to estimate price elasticity: how quantity demanded changes relative to price shifts -- to create highly accurate demand curves for every individual product." FTC seeks public commentary for new surveillance pricing rules On Wednesday, August 19, the FTC announced that it is currently seeking public comment on an enforcement policy statement that would govern personalized pricing as part of its efforts to combat businesses "that mislead consumers with hidden fees and surprise charges." The enforcement would be against retailers that pretend their prices are static when they actually change depending on the available data of the person potentially making the purchase. "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 FTC Chairman Andrew Ferguson. But even the FTC acknowledges that it does not have the power to ban all personalized pricing practices, but it can make the process more transparent. "The FTC does not have the legal authority to ban personalized pricing in all circumstances, but businesses that fail to tell consumers how their personal data is being used to set a price may be in violation of the FTC Act and other laws we enforce," Ferguson said. dowell / Getty Images What happens next? The FTC says that retailers that utilize the undisclosed collection of personal data for the purpose of personalized pricing could be violating the FTC Act, which "prohibits unfair or deceptive practices in the marketplace." Now that the FTC is soliciting public comment, they have 30 days to submit their comments electronically at this website. So far, there is only one comment; it reads, "Absolutely ban personalized pricing without qualification. Allowing it would be bad for society and a nightmare for consumers. It's bad enough that companies have so much unauthorized personal, private data about people, which is already being abused in countless ways. Personalized pricing would weaponize it even more. Naive young people, uneducated and poor people with limited access to information, and trusting seniors would be especially vulnerable to being misled and abused by personalized pricing." The FTC says retailers hiding their surveillance pricing activities from consumers are violating Section 5 of the FTC Act, and businesses that do utilize personalized pricing should "clearly and conspicuously" disclose not only the fact that they are doing it, but also the basis for that personalization and the types of data on which the personalization is based. "Consumers expect prices for products and services to change based upon supply and demand, not their web surfing habits or buying history, the FTC says. "Retailers who represent or imply that a price is static when it in fact varies by individual are at risk of misleading customers." The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published August 20, 2026 at 11:03 AM.

Why the US Wants Companies to Disclose Personalised Pricing

The US Federal Trade Commission (FTC) is tightening the noose on personalised pricing. The regulator has warned that companies that tweak the price of a product or service based on their estimate of how much someone is willing to pay, using their personal data, could be in violation of federal law. "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." -- FTC Chairman Andrew Ferguson. Is personalised pricing illegal in the US? The FTC says it does not have the legal authority to ban personalised pricing outright. However, it has proposed a new policy that would require businesses to "clearly and conspicuously" disclose if they are engaging in personalised pricing. * On top of that, digital platforms will be required to disclose the types of data they rely on to set varying prices for individual consumers. * Companies not disclosing whether they collect or use personal data for the purpose of personalised pricing could be in violation of Section 5 of the FTC Act, which prohibits unfair or deceptive practices in the marketplace, the regulator said. * In June, New Jersey implemented the Fair Price Protection Act, which prohibits businesses from using users' personal data to charge different prices for identical products. Commenting on the law, US Senator Joe Cryan said, "Surveillance pricing is an abuse of modern technology where AI is used to set different prices for different customers. Users should be protected from the intrusive use of algorithms, personal data and other technologies to exploit their food purchases or individual characteristics." Why it matters for India: Surveillance pricing is especially significant from an India lens. E-commerce and quick-commerce platforms continue to engage in dark patterns and have been tweaking platform fees, handling fees and other charges at will. This, in turn, hikes the end price for consumers. Last September, the Central Consumer Protection Authority (CCPA) fined FirstCry for misleading consumers by adding GST at checkout despite showing "MRP inclusive of all taxes". This practice amounts to drip pricing, a dark pattern under the CCPA's Dark Pattern Guidelines 2023. According to data shared by the Consumer Affairs Ministry in the Lok Sabha, only 31 e-commerce and quick-commerce platforms currently comply with dark pattern guidelines. The issue becomes sharper when you look at what legacy FMCG companies have been saying about quick commerce. The likes of Hindustan Unilever and Marico are designing new price packs exclusively for this segment. "Quick commerce actually allows us to segment consumers, and that is a very powerful thing from our perspective, to actually create the right portfolio, channel architecture, which we are building with a lot of packs designed for that particular channel," said Priya Nair, Hindustan Unilever's CEO and managing director, during the company's Q1 FY27 earnings call. "I believe there is a certain shopper who is slightly different, which is less price sensitive, maybe wanting more convenience. So, we ensure that there is a separate pack architecture for each channel so that it is not cannibalistic and therefore, we maximise each channel and also ensure that we are test marketing new products to this quick commerce opportunity," said Saugata Gupta, CEO and managing director of Marico. While dynamic pricing is not banned in India, companies could face serious legal trouble if they vary prices based on a consumer's purchase history, location, device type or behavioural data without their consent or adequate disclosure. Such practices could invite regulatory scrutiny under the provisions of the Consumer Protection Act and the CCPA's Dark Pattern Guidelines. Over the past few years, concerns over pricing algorithms have grown. In 2024, ride-hailing apps were allegedly charging iPhone users more than Android users for similar routes in Chennai. Questions around differential pricing by cab aggregators even reached Parliament last year. However, India still lacks a dedicated law to regulate personalised pricing.