Gulf Shores, Ala. — (GSN) — In recent years, advancements in artificial intelligence and big data have transformed how businesses set prices. Rather than displaying a single sticker price to every customer, companies are increasingly using algorithms to target individuals with unique, customized prices—a practice known as personalized pricing.

Personalized pricing (previously studied by regulators under the term "surveillance pricing") is the practice of setting individualized prices for products or services based on a consumer’s personal data.

The data used for this personalization can include:

• Online browsing histories and search queries.
• Detailed purchase history and brand loyalty.
• Geographic location and demographic information.
• Real-time actions, such as how long an item is left in a virtual shopping cart or mouse movements on a webpage.

In its policy draft and surrounding reports, the FTC has highlighted several hypothetical and real-world scenarios where personalized pricing crosses into predatory territory:

Grocery Delivery: A grocery store charging a delivery customer more for milk because data reveals the household has several children.

Emergency Rides: A ride-hailing company charging a user a higher fare to travel to a concert or retaurant because of your past personal habits.

Urgent Travel: A hotel charging an online guest a higher rate because browsing history suggests they are traveling to attend a funeral and have limited flexibility.

Search Bias: Showing a consumer profiled as a new parent higher-priced baby thermometers on the first page of their search results.

Is Personalized Pricing Legal? - The short answer is: yes, but only if it is fully transparent.

The FTC does not have the legislative authority from Congress to ban personalized pricing outright. Therefore, the act of charging different prices to different people is not inherently illegal. However, secretly varying prices based on consumer data can violate federal and state laws.

FTC Chairman Andrew Ferguson stated: "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."

Under the FTC's proposed policy, if a business chooses to personalize prices, it must "clearly and conspicuously disclose":

1. The fact that the price shown is personalized.
2. The criteria or basis used for that personalization.
3. The criteria or basis used for that personalization.

The push to regulate personalized pricing has created a stark divide:

• Consumer Advocates: Organizations like Consumer Reports argue that merely disclosing the practice is not enough, as consumers are unlikely to read dense privacy policies while shopping. They are pushing for Congress and the FTC to completely ban companies from using personal data to set prices.

• Retail Associations: The National Retail Federation and other industry groups defend the collection of data, stating that consumers benefit significantly from customized incentives, discounts, and rewards programs. They argue that retail margins are already incredibly tight and that arbitrary price discrimination is rarely used because it risks destroying customer loyalty.

As algorithm-driven pricing becomes the default across e-commerce, travel, and retail, "personalized pricing" represents a major frontier in consumer rights. While the practice remains legal on a federal level, businesses must step up their transparency or risk severe enforcement actions under the FTC’s tightening regulatory framework.