U.S. News: Retailers Are Warned Over Dynamic Pricing

“Merchants have become skilled at using online shopping habits, smartphone use and other personal data to charge consumers higher prices. Now the Federal Trade Commission is putting retailers on notice that such personally tailored pricing risks breaking the law.

 

In a new enforcement bulletin released Wednesday, the commission told companies that they must disclose when they use highly detailed information about individuals to personalize a price offer. The new statement puts the Trump administration's imprint on a burgeoning movement to rein in how merchants use price-setting algorithms.

 

Companies must offer "clear and conspicuous" disclosure of any personalized pricing, including the type of data that was used to generate the offer, the FTC said in its statement. The agency says it lacks authority to prohibit the practice but would "deploy enforcement resources" when it spots companies that don't follow its disclosure standards.

 

Businesses have long set different prices for distinct groups of consumers based on their willingness to pay for a product or service. College students and senior citizens, for instance, may see lower prices for subscriptions or mobile-phone contracts.

 

Varying prices down to the individual level has long been the holy grail of marketing, but it has become politically charged. Companies collect vast amounts of data about consumers, including browsing history, location, device type, purchase patterns, and even how long a cursor hovers over a product. Software that automates price-setting -- often driven by AI -- can quickly turn that data into tailored pricing.

 

The FTC undertook a study of the practice during the Biden administration and found it could be used to set higher prices when merchants know that shoppers, such as new parents or first-time car buyers, are unfamiliar with a market. FTC Chairman Andrew Ferguson, then a minority member of the commission, said at the time that Democrats rushed out the findings, but didn't take a firm view on personalized pricing.

 

Since then, Instacart was revealed to have allowed retailers to use its software to vary prices for individuals across four cities who added the same items simultaneously to their shopping carts. Instacart said the experiment helped retailers understand consumer preferences but scrapped the tests after customer pushback.

 

The FTC said in its statement that a "food delivery company quoting a higher price to consumers on the basis of data personal to those consumers" would require disclosure. So would ride-share companies that charged a user more based on knowledge that the passenger didn't have a competing app on their phone.

 

Democrats such as Sen. Elizabeth Warren (D., Mass.) say dynamic pricing is a way to squeeze customers.” [1]

 

1. U.S. News: Retailers Are Warned Over Dynamic Pricing. Michaels, Dave.  Wall Street Journal, Eastern edition; New York, N.Y.. 20 Aug 2026: A3.