Is it Personal? FTC Proposes Enforcement Framework for Personalized Pricing Practices

Key Takeaways:

• Undisclosed personalized pricing may be deceptive: The FTC says failure to disclose may raise Section 5 risk when consumers reasonably expect that prices are not being set based on their personal data.
• Disclosure expectations may be broader than expected: Businesses may need to explain not only that pricing is personalized, but also how the price was determined and what categories of data were used.
• Personalized pricing omissions are likely to be treated as material: The proposal suggests the FTC views misstatements or failures to disclose personalized pricing as information that could affect consumer decisions.
• Data collection and consent practices remain a separate enforcement risk: The FTC emphasizes that collecting, using, or disclosing personal data without obtaining and verifying consent can itself raise unfairness concerns.
• Full disclosure may not eliminate risk: The FTC left open the possibility that some personalized pricing practices could still be considered unfair even when clearly disclosed to consumers.

Businesses should be on alert after last week’s call for public comment by the Federal Trade Commission on a proposed policy statement envisioning future enforcement activity targeting personalized pricing—the use of personal data to estimate individual consumers’ willingness to pay and adjust prices accordingly.¹ The announcement is particularly relevant to food-delivery services, rideshare companies, hotels, grocery stores, and retailers who may currently deploy personalized pricing or may be making plans to do so—the FTC’s statement specifically identifies those businesses as particularly susceptible to concerns about unfair business practices through the use of personalized pricing.

While the FTC’s policy statement would not create new law, it nonetheless signals how the FTC plans to interpret and apply its existing enforcement authority in this quickly developing area. If finalized, the policy statement would contain the FTC’s clearest guidance yet on when, and how, the use of personalized pricing may violate Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices” and “unfair methods of competition.”²

Background

The FTC’s policy statement comes amid a flurry of state action in the personalized pricing space. As covered in our prior alert, state legislatures and enforcers have taken the lead in regulating AI-influenced pricing, including the use of AI tools to analyze consumer data and recommend personalized pricing. States including Connecticut, Maryland, and New York have already enacted laws restricting the use of personalized pricing or requiring clear disclosures when businesses set prices using an algorithm. Many more states are considering similar legislation, such as California, Illinois, and Pennsylvania. The FTC’s policy statement signals growing federal interest in scrutinizing personalized pricing practices.

The FTC’s Policy Statement

Recognizing the limits of its enforcement authority and the inconclusive state of the economic research, the FTC does not suggest that personalized pricing would be prohibited in all circumstances.³ Instead, its statement proclaims that:

Where consumers reasonably expect that prices for a product or service will not vary based on their personal data, businesses that engage in personalized pricing should clearly and conspicuously disclose not just that the price is personalized, but also the basis for that personalization and the types of data on which the personalization is based. The failure to make these disclosures is likely to constitute an unfair or deceptive act or practice in violation of Section 5.⁴

The policy statement explains that traditional principles for identifying deceptive and unfair conduct “apply with the same force to personalized pricing as to any other commercial conduct.”⁵

• Deceptive conduct “involves a representation, omission, or practice that is material and likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.”⁶
• Unfair conduct “causes, or is likely to cause, substantial injury to consumers that is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or competition.”⁷

The elaboration of these principles in the policy statement could have important ramifications for businesses contemplating the use of this transformative pricing technology:

• Consumer expectations are key: The FTC would consider the undisclosed use of personalized pricing to be deceptive as long a consumer “reasonably believes” that a price is not based on personal data, regardless of whether the business expressly or impliedly misrepresented the nature of the price in any way.⁸ At the same time, however, the policy statement recognizes that the use of personalized pricing is widely accepted (and expected) in certain industries, such as insurance and financial services.⁹ It remains to be seen how “reasonable belief” that a price is not set based on personalized data would be established, which creates considerable ambiguity.
• Not only when, but how: The policy statement emphasizes that consumers are entitled to know not only whether personalized pricing was used but also how their personal data impacted their price. Moreover, a disclosure merely noting the personalized nature of a price without explaining how it was generated is likely deficient.¹⁰ Businesses will have to carefully consider what disclosures they make to comply with the FTC’s policy statement, while at the same time safeguarding their competitively sensitive pricing information.
• Personalized pricing likely material: Section 5 of the FTC Act requires that “deceptive” statements be material before they can be actionable, and the policy statement would solidify the FTC’s view that any misrepresentations or omissions regarding the use of personalized pricing are likely to be material. The underlying theory seems to be that informed consumers would otherwise take steps to avoid any resulting price increases or potentially decline the purchase altogether.¹¹
• Unfair data practices: Citing a robust history of prior enforcement actions, the policy statement reminds businesses that collecting, using, or disclosing consumers’ personal data without obtaining and verifying consent can also constitute a violation of Section 5 of the FTC Act.¹²
• Even full disclosure may be insufficient: Tucked away in a footnote, the FTC “declines at this time to take any position on whether some personalized pricing practices are unfair even when fully disclosed to consumers.”¹³ Although not fully explained, this likely refers to potential situations where a well-informed consumer is nevertheless unable to mitigate or avoid a personalized price. One example discussed in the policy statement is where a consumer is experiencing a life-threatening medical emergency or condition.¹⁴ Thus, even businesses that make the contemplated disclosures may nonetheless face an enforcement action.

Conclusion

The FTC’s policy statement is another significant development in the ever-shifting regulatory and legal landscape surrounding personalized pricing. Once published in the Federal Register, the policy statement will be open for public comment for 30 days, after which the FTC will consider the comments as it decides whether to finalize the statement.

For more information, or if you would like to discuss submitting a comment to the FTC, please reach out to one of the attorneys listed on the alert or your regular O’Melveny contact. The O’Melveny team has deep expertise in federal and state antitrust enforcement actions, antitrust litigation, and compliance programs.

¹ https://www.ftc.gov/news-events/news/press-releases/2026/08/ftc-seeks-comment-enforcement-policy-statement-regarding-personalized-pricing

² 15 U.S.C. § 45(a)(1).

³ Proposed Policy Statement at 1, 3-4.

⁴ Id. at 1.

⁵ Id. at 5.

⁶ Id. at 4-5.

⁷ Id. at 5.

⁸ Id. at 5.

⁹ Id. at 6.

¹⁰ Id. at 1, 6-7.

¹¹ Id. at 5.

¹² Id. at 7.

¹³ Id. at 6, note 20.

¹⁴ Id. at 8.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Diana Aguilar, an O'Melveny partner licensed to practice law in California; Lauren M. Weinstein, an O’Melveny partner licensed to practice law in the District of Columbia; Sergei Zaslavsky, an O’Melveny partner licensed to practice law in the District of Columbia and Maryland; Kyle Grossman, an O’Melveny counsel licensed to practice law in California; Adam Walker, an O’Melveny counsel licensed to practice law in the District of Columbia; and Jason Yan, an O’Melveny counsel licensed to practice law in the District of Columbia and Virginia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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