Your Price May Vary: The FTC’s Personalized-Pricing Puzzle
A price that knows your name may be creepy. It may also be a bargain. That ambiguity sits at the heart of the Federal Trade Commission’s (FTC) proposed enforcement policy statement on personalized pricing, which opens with a candid admission: The practice is “not well understood,” and its effects on consumers remain “unclear.” That uncertainty should shape the final policy.
Personalized pricing is a technologically refined form of price discrimination—charging different customers different prices for the same product or service. But it is not one practice with one predictable effect. Depending on the market, consumer demand, competition, and what would happen without personalization, it may lower prices, expand output, sharpen competition, or raise legitimate consumer concerns.
The FTC should therefore draw a clear legal line. A seller may not misrepresent what a price is, who can obtain it, or why it was offered. But a seller does not necessarily deceive consumers merely by failing to volunteer that individualized information helped determine the price. Turning that silence into a violation would allow a consumer’s assumption to create a duty to disclose—and could make beneficial discounts harder to offer.
As a new Mercatus Center policy comment puts it, “[a] final statement built around those limits, coupled with express protection for individualized discounts, would deter genuine deception and unfairness while preserving price competition and experimentation that can lower prices and expand output.”