By: Leila Edouard
On August 19, 2026, the FTC made a proposed enforcement policy statement intended to enforce disclosures against any deceptive or unfair personalized pricing practices in violation of Section 5 of the FTC Act.[1] Personalized pricing is the practice of collecting and using a consumer’s personal data to set individualized prices based on the consumer’s likelihood to buy a product or service.[2]
The FTC formally raised concerns over personalized pricing in July 2024, when it ordered eight companies to disclose how they use consumer data to set targeted prices for their products and services.[3] Their initial findings revealed that personal information is predominantly used to target consumers with varying prices for the exact goods or services at the same time.[4] Despite the findings, the FTC maintains that personalized pricing practices remain poorly understood.[5] As AI algorithms continue to advance, businesses are using them as tools to collect consumer finances and purchasing tendencies.[6] This allows businesses to maximize revenue by tailoring prices based on each consumer’s price threshold, potentially reducing consumer savings.[7]
The FTC’s recent proposal warns that these practices may be unlawful under Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices.[8] An act or practice is considered unfair when “it causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.”[9] Additionally, an act or practice is considered deceptive when it involves a material representation, practice, or omission that is likely to mislead a reasonable consumer and cause that consumer harm.[10]
Although the FTC has illustrated various practices of personalized pricing, there is no clear statutory definition under the FTC Act.[11] Nonetheless, this absence does not restrict the FTC from targeting these practices, as Congress grants them broad authority to define unfair methods of competition.[12] Based on the FTC’s illustrations, Section 5 scrutiny may be interpreted on consumer-related data practices—such as behavioral tendencies, preferences, purchasing time, geographical locations, and purchasing channels—to charge different consumers varying prices for identical products or services at the same time.[13]
Personalized pricing practices may face heightened Section 5 scrutiny when they rely on sensitive location data, such as medical clinics and places of worship, collected without affirmative consumer consent.[14] An artificially inflated price may be a substantial injury to a consumer because a consumer may not reasonably modify their consuming behaviors or dispute inaccurate data information.[15] Furthermore, pricing practices may be considered deceptive under Section 5 when a business falsely discloses personalized pricing through material misrepresentation or omission where it misleads a consumer in reasonably believing that a price is fixed, widely offered, discounted, or of another benefit.[16] Additionally, it can harm a consumer because the unawareness of a personalized price can deprive a consumer the ability to take reasonable steps to avoid a higher price.[17]
The Commission proposes adequate disclosures of personalized pricing through a “clear and conspicuous” standard.[18] Under this standard, sellers must disclose the fact of a price being personalized, the basis of that personalization, and the type of data used associated with the personalization.[19] The mechanics of the disclosure are unclear, including whether every material fact of personalized pricing practices must be stated. However, the Commission affirmed that merely stating a product is for a “specially selected” price is not adequate.[20]
Although the proposal does not specify the available remedies for noncompliance, its reliance on Section 5 suggests that the FTC could issue cease-and-desist orders against businesses that fail to comply.[21] A company that knowingly violates a final order may face substantial civil penalties.[22]
FTC’s proposal signals a potential shift in business compliance, as companies may need to prepare their algorithmic pricing practices for Section 5 scrutiny.[23] To achieve compliance, companies may require monitoring pricing audits, affirmative consent mechanisms, and vendor management to obtain affirmative consumer consent.[24]
While the FTC acknowledges exploitative pricing disparities, the proposal raises debate regarding the efficacy of transparency alone.[25] Until adopted, whether a warning label is enough to prevent price discrimination remains an open legal question.[26] At the same time, critics argue businesses may avoid personalized coupons and loyalty programs.[27] They suggest the FTC should sharpen the policy by protecting legitimate discounts while still targeting deceptive practices.[28]
While states have enacted personalized pricing, Congress has not explicitly prohibited price discrimination.[29] The proposed policy statement is non-binding advisory guidance.[30] Therefore, federal courts are likely to treat personalized pricing disclosure on a case-by-case basis rather than a categorical rule.[31] Nevertheless, businesses should seek legal advice to avoid regulatory and reputational risks, given the influence of the FTC and state legislatures over commercial market behavior.
[1] See Fed. Trade Comm’n, Federal Trade Commission’s Proposed Enforcement Policy Statement Regarding Personalized Pricing, 1 (Aug. 19, 2026) [hereinafter Proposed Enforcement Policy Statement], https://www.ftc.gov/system/files/ftc_gov/pdf/p034101-ftc-enforcement-policy-statement-re-personalized-pricing-proposed-for-public-comment.pdf [https://perma.cc/YC6A-3LUN]; see 15 U.S.C. § 45.
[2] See Proposed Enforcement Policy Statement, supra note 1, at 3; Katharine R. Haigh et al., FTC Proposes Enforcement Policy Statement on Personalized Pricing, Paul, Weiss, Rifkind, Wharton & Garrison LLP (Aug. 20, 2026), https://www.paulweiss.com/insights/client-memos/ftc-proposes-enforcement-policy-statement-on-personalized-pricing [https://perma.cc/3EY3-GXZH].
[3] See Press Release, Fed. Trade Comm’n, FTC Issues Orders to Eight Companies Seeking Information on Surveillance Pricing (July 23, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-issues-orders-eight-companies-seeking-information-surveillance-pricing [https://perma.cc/J4QB-YWZP].
[4] See Press Release, Fed. Trade Comm’n, FTC Surveillance Pricing Study Indicates Wide Range of Personal Data Used to Set Individualized Consumer Prices (Jan. 17, 2025) [hereinafter FTC Surveillance Pricing Study], https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-surveillance-pricing-study-indicates-wide-range-personal-data-used-set-individualized-consumer [https://perma.cc/F79W-KQ4L].
[5] See Proposed Enforcement Policy Statement, supra note 1, at 3.
[6] See Jay L. Zagorsky, Personalized Pricing Has Spread Across Many Industries. Here’s How Consumers Can Avoid It, PBS (Aug. 3, 2025, at 18:56 ET), https://www.pbs.org/newshour/economy/personalized-pricing-has-spread-across-many-industries-heres-how-consumers-can-avoid-it [https://perma.cc/XM3V-YGGA] (discussing how various industries are using AI algorithms to personalize prices and boost profits).
[7] See id.; Proposed Enforcement Policy Statement, supra note 1, at 3–4.
[8] See Proposed Enforcement Policy Statement, supra note 1, at 4–5; see 15 U.S.C. § 45(a)(1).
[9] § 45(n).
[10] See Proposed Enforcement Policy Statement, supra note 1, at 4–5.
[11] See id. at 2–3, 7–8 (listing different examples of personalized pricing); FTC Surveillance Pricing Study, supra note 4.
[12] See FTC v. R.F. Keppel & Bro., Inc., 291 U.S. 304, 310–12, 314 (1934) (establishing that the Commission has authority to consider “unfair methods of competition” as the phrase is meant to be broad and flexible); see § 45(a)(2), (n).
[13] See Proposed Enforcement Policy Statement, supra note 1, at 2–3, 7–8; FTC Surveillance Pricing Study, supra note 4 (describing the use of consumer characteristics, behavioral data, geographic information, and purchasing patterns to generate individualized prices).
[14] See Proposed Enforcement Policy Statement, supra note 1, at 7; see also Press Release, Fed. Trade Comm’n, FTC Finalizes Order with X-Mode and Successor Outlogic Prohibiting It from Sharing or Selling Sensitive Location Data (Apr. 12, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-finalizes-order-x-mode-successor-outlogic-prohibiting-it-sharing-or-selling-sensitive-location [https://perma.cc/5PWC-FT73] (explaining that the FTC can have final order prohibiting a company sharing sensitive location data without consent from consumers).
[15] See Proposed Enforcement Policy Statement, supra note 1, at 6.
[16] See id. at 5; cf. FTC v. Colgate-Palmolive Co., 380 U.S. 374, 387 (1965) (“It has long been considered a deceptive practice to state falsely that a product ordinarily sells for an inflated price but that it is being offered at a special reduced price, even if the offered price represents the actual value of the product and the purchaser is receiving his money’s worth.”).
[17] See Proposed Enforcement Policy Statement, supra note 1, at 5; cf. FTC v. Standard Educ. Soc’y, 302 U.S. 112, 116 (1937) (“There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business.”).
[18] See Proposed Enforcement Policy Statement, supra note 1, at 6.
[19] Id.
[20] See id. at 6–7.
[21] See 15 U.S.C. § 45(m)(1)(B).
[22] Id.
[23] See Katharine R. Haigh et al., supra note 2; see also Emily Collins, David B. Hamilton & Caroline Olsen, When Pricing Gets Personal: Defining and Regulating Surveillance Pricing, Am. Bar Ass’n, (Apr. 30, 2026), https://www.americanbar.org/groups/antitrust_law/resources/source/2026-april/when-pricing-gets-personal/ (on file with the American University Business Law Review) (providing governance guidance and compliance measures for companies using surveillance-pricing tools).
[24] See Collins, Hamilton & Olsen, supra note 23.
[25] See Press Release, Fed. Trade Comm’n, FTC Seeks Comment on Enforcement Policy Statement Regarding Personalized Pricing (Aug. 19, 2026), https://www.ftc.gov/news-events/news/press-releases/2026/08/ftc-seeks-comment-enforcement-policy-statement-regarding-personalized-pricing (on file with the American University Business Law Review) (discussing the widespread debate on the legal concerns with the use of personalized pricing); see also Emily Collins, David B. Hamilton & Caroline Olsen, supra note 23 (analyzing FTC inquiries and state regulatory approaches to surveillance pricing practices and its remaining legal gaps).
[26] See FTC Chooses Disclosure Over an Outright Ban in Its First Move on Personalized Pricing, People of Internet (Sep. 2, 2026) [hereinafter FTC Chooses Disclosure], https://peopleofinternet.com/articles/ftc-chooses-disclosure-over-an-outright-ban-in-its-first.html [https://perma.cc/8AEU-DZ9F] (“[T]he statement declines to say personalized pricing is unlawful even when fully disclosed.”).
[27] See Alden Abbott, Your Price May Vary: The FTC’s Personalized-Pricing Puzzle, Truth on the Mkt. (Sep. 2, 2026), https://truthonthemarket.com/2026/09/02/your-price-may-vary-the-ftcs-personalized-pricing-puzzle/ [https://perma.cc/Q3L2-5JZR] (arguing that the FTC should create a safe harbor for genuine individualized discounts as it may prompt firms to reduce those offers); Derek Kravitz, Is That Price Personalized? The FTC Says Companies Should Have to Tell You., Consumer Reps. (Aug. 21, 2026), https://www.consumerreports.org/money/prices-price-comparison/personalized-pricing-surveillance-ftc-policy-a9891636455/ [https://perma.cc/JG4A-PL6H] (quoting Drew Ambrogi) (“Sweeping loyalty offers and personalized coupons into the same proposed disclosure regime would bury shoppers in fine print without protecting them from higher prices.”).
[28] See Abbott, supra note 27.
[29] See Proposed Enforcement Policy Statement, supra note 1, at 1; Timothy A. Butler, Matthew M. White & Cody B. Davis, Algorithmic Pricing Under Fire: State Restrictions on Personalized and Surveillance Pricing, Greenberg Traurig (Sep. 3, 2026), https://www.gtlaw.com/en/insights/2026/9/algorithmic-pricing-under-fire-state-restrictions-on-personalized-and-surveillance-pricing [https://perma.cc/M42T-9D2P] (explaining the differing restrictions states take to regulate personalized pricing); Ian L. Barlow, Lauren N. Lerman & Melissa Alba, Amidst Uncertainty from FTC, States Zero in on Dynamic and Algorithmic Pricing, Reuters (Mar. 4, 2026, at 11:36 ET), https://www.reuters.com/legal/legalindustry/amidst-uncertainty-ftc-states-zero-dynamic-algorithmic-pricing–pracin-2026-03-04/ (on file with the American University Business Law Review) (emphasizing that the media attention of personalized pricing may influence other states to propose similar legislations).
[30] See 16 C.F.R. § 1.5 (stating that the Commission’s administrative interpretation of laws are guidance for the public).
[31] See FTC v. R.F. Keppel & Bro., Inc., 291 U.S. 304, 314 (1934) (explaining that courts decide whether FTC’s theories can be applied to determine unfair competitive practices or methods); see also FTC Chooses Disclosure, supra note 26 (stating that the FTC’s proposal of adopting unfair or deceptive personalization practices will be decided on a case-by-case basis).
