Your pricing algorithms may be doing more than you think. CM Law Partner Linda Goldstein breaks down what the FTC’s new policy statement means for businesses using consumer data to set prices in her Law360 article.
What if two customers shopping for the same product at the same time see different prices—not because demand changed, but because one customer’s personal data suggests they’re willing to pay more?
That’s the kind of personalized pricing practice now drawing increased scrutiny from the Federal Trade Commission (FTC).
In her October 2 article, FTC Proposal Puts Personalized Pricing On Notice, CM Law Partner Linda Goldstein examines the FTC’s proposed enforcement policy statement and the potential implications for businesses using consumer data, AI-powered pricing algorithms, loyalty analytics and predictive models to determine what individual customers pay.
The key distinction: dynamic pricing isn’t the same as personalized pricing.
Prices that fluctuate with supply, demand, or inventory differ from prices tailored to an individual based on browsing history, location, household composition, purchasing behavior, or inferred willingness to pay.
The FTC’s concern? Consumers may reasonably expect to see the same price as other customers in comparable circumstances. When businesses secretly use personal data to charge different prices, the agency sees potential violations of Section 5 of the FTC Act involving deception, material omissions, and unfair consumer injury.
And simply disclosing that a price is personalized may not be enough.
According to Linda’s analysis, effective disclosures may need to explain that the price is personalized, the basis for the decision, and the types of consumer data used. Businesses must also examine whether their privacy policies adequately address pricing-related data use and whether they have obtained and verified appropriate consumer consent.
The stakes extend beyond the FTC. Linda notes that state laws addressing personalized or surveillance pricing are adding another layer of compliance complexity, making it important for businesses to monitor a rapidly developing regulatory landscape.
What should businesses do now?
Linda recommends that businesses:
- Audit pricing practices to identify where consumer-specific data influences prices.
- Review disclosures to ensure they accurately explain the personalization, its basis, and the data involved.
- Update customer-facing communications across websites, checkout flows, phone scripts, and chat interfaces.
- Reassess privacy and consent practices governing the use of consumer data for pricing.
- Monitor evolving state requirements that may impose additional obligations.
The bottom line: Personalized pricing is no longer just a marketing or technology decision. It’s a transparency, privacy, and compliance issue. Businesses should be prepared to explain not only what a customer is being charged, but why—and how the data behind that decision was collected and used.
If you have questions about the impact of the FTC’s notice and your organization’s policies on personalized pricing, you can connect directly with Linda here: lgoldstein@cm.law.
CM Law (cm.law) – formerly Culhane Meadows – is the largest national, full-service, women-owned & managed (WBE) law firm in the United States. Designed to provide experienced attorneys with an optimal way to practice sophisticated law while maintaining a superior work/life balance, the firm offers fully remote work options, a transparent, merit and math-based compensation structure, and a collaborative culture. Serving a diverse clientele—from individuals and small businesses to over 40 Fortune-ranked companies—CM Law is committed to delivering exceptional legal services across a broad spectrum of industries.
The foregoing content is for informational purposes only and should not be relied upon as legal advice. Federal, state, and local laws can change rapidly and, therefore, this content may become obsolete or outdated. Please consult with an attorney of your choice to ensure you obtain the most current and accurate counsel about your particular situation.
