The FTC Personalized Pricing Inquiry Turn Toward Compensation

The new wave of data driven personalized pricing is catching the attention of state and federal regulators. Recently, the FTC issued its first enforcement policy statement with a general mandate that “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.”  

State approaches have varied. State and municipal regulators have mostly focused on the use of personalized pricing in connection with essential goods (usually groceries and utilities). Some (like New York) have enacted broader regulations governing personalized pricing. To date, however, all of these regulations have focused on consumer transactions.  

On Oct. 28th, the FTC announced that it has launched a Section 6 inquiry regarding the personalized pricing and compensation methodologies employed by major airlines, ride-sharing companies, and food-delivery firms. The respondents to these inquiries received orders compelling the filing of special reports. Notably, Section 6 inquiries allow the FTC to “conduct wide-ranging studies that do not have a specific law enforcement purpose.” Thus, FTC often uses Section 6 inquiries to gather information on market trends, and they are not necessarily a precursor to an enforcement action. 

Still, the FTC’s Section 6 inquiry reflects a marked escalation from its announcement of a proposed enforcement policy only months earlier in two respects. First, the FTC quickly shifted from generally announcing a proposed enforcement policy to initiating actual inquiries. Second, the FTC’s inquiry addresses personalized pricing not only in consumer pricing, but also in employee and contractor compensation.  

The FTC’s proposed enforcement policy and state regulations already raised questions about when the use of consumer data to set prices crossed the line from an accepted pricing practice into one that raises regulatory concerns. The FTC’s Section 6 inquiry raises new questions regarding when the use of data to set compensation will raise regulatory concerns – and whether states will consider similar regulation.  

This article examines the FTC’s Section 6 inquiry following the announcement of its enforcement policy statement, and the current status of state and local regulation on personalized pricing. 

Leading Up to the FTC’s Section 6 Inquiry 

Personalized pricing generally refers to setting or adjusting a price based on information about an individual consumer (e.g., past purchases, online activity, location, or an estimated willingness to pay). It differs from price changes driven by factors that apply more broadly, including inventory, operating costs, and market demand. Depending on the business and the information used, personalized pricing can result in different consumers being offered different prices for the same product or service. 

On Aug. 19th, the FTC released its proposed Enforcement Policy Statement Regarding Personalized Pricing for public comment. While the proposed statement does not create new legal requirements, it signaled the FTC’s intention to use its existing authority under Section 5 to address deceptive or unfair personalized pricing practices. 

As explained in Clark Hill’s prior alert, the Enforcement Policy Statement was a broad disclosure mandate requiring “businesses engaging in personalized pricing [to] clearly and conspicuously disclos[e] […] [1] [t]he price is personalized, [2] [t]he basis for that personalization and [3] [t]he types of personal data [on which the personalization is based].” The FTC warned that failing to provide these disclosures is likely to violate Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices. 

As a whole, the enforcement policy was focused only on consumer pricing.  

The FTC’s Oct. 28th Inquiry Focuses on Both Consumer Pricing and Worker Compensation. 

The FTC issued special orders under its Section 6(b) authorities to nine major U.S. companies across the airline, ride share, food delivery, and retail industries. The inquiries cover not only the use of personalized pricing with those companies’ respective consumer products, but also the use of personalized pricing to determine how much gig workers are paid. 

Notably, not all of the targets on the inquiry are alleged to have engaged in both forms of personalized pricing. The FTC’s announcement does not claim that the airlines receiving special orders are engaged in personalized pricing in compensation. Rather, the compensation inquiry is directed toward companies that use gig workers (e.g., ride share and food delivery companies). The FTC asserts that these companies “may engage in personalized compensation based on their drivers’ personal data, such as their phone usage or acceptance history for past offers.” 

The special orders are primary requesting information that surrounds: (1) the extend to which the company has engaged in personalized pricing, and (2) the data inputs, methodologies, and algorithms used to determine pricing. Overall, the FTC is requesting: 

1. The company’s corporate structure, operations, financial performance, and document retention policies. 
2. The use of personal information to determine consumer pricing, worker job assignments, and worker compensation, including the methodologies, algorithms, software, and data inputs involved. 
3. The categorization of consumers and workers for purposes of pricing, job assignments, and compensation. 
4. The sources, development, testing, and sharing of personal information, data inputs, and related technologies, including relationships with third parties. 
5. Internal research, testing, and evaluations of these practices, including their costs, benefits, and effects on consumers, workers, and the company.  

Disclosures to consumers and workers concerning these practices, along with supporting documents and communications. 

*This summary highlights the main categories of information sought, and readers should refer to the FTC’s original October 28th inquiry for the specific requests and supporting documents required. 

The companies have 45 days to respond. The FTC may grant extension of those timelines. Ultimately, the FTC is likely to produce a report highlighting its findings. Clark Hill will provide updates as the FTC’s inquiry progresses.  

State and Municipal Personalized Pricing Regulation 

As explained above, so far state and municipal regulations have focused on disclosure and transparency in the sale of consumer goods and services. Some require businesses to disclose when consumer data is used to determine prices, while others restrict or prohibit certain pricing practices altogether. As a result, businesses face a growing patchwork of laws with different requirements, exceptions, and enforcement mechanisms. 

Companies should always begin with a scope assessment to determine if they are within the ambit of the regulation. Existing and proposed legislation (as of the publication of this article) are summarized below.  

New York:  

• Algorithmic Pricing Disclosure Act (N.Y. Gen. Bus. Law § 349-a) 
• Scope: Requires disclosure when personal data sets prices of a specific good or service by any business within New York. This should include with such statement, display, image, offer or announcement, a clear and conspicuous disclosure that states: “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA” 
• One Fair Price Act: 
  • In 2026, the Legislature passed the One Fair Price Act Senate Bill 8623B /Assembly Bill 9349B, which would amend § 349-a to prohibit such personalized or “surveillance” pricing altogether. 
  • The One Fair Price Act has not yet been delivered to the governor. If enacted, the bill would be effective 180 days from signing. 
  • The One Fair Price Act would shift the statute from a disclosure obligation to a pure prohibition. 
  • The One Fair Price Act would, however, retain disclosure requirements for certain forms of dynamic pricing that do not rely on personal data.  
• Attorney General Authority: Enforced exclusively by the New York State Attorney General, as there is no private right of action for individual lawsuits. 
• Cure Period: The Attorney General must first issue a cease-and-desist letter detailing the violation and providing a cure window. 
• Civil Fines: If a company fails to cure, it faces civil penalties of up to $1,000 per violation. 
• Effective: May 9, 2025 

Maryland: 

• Protection From Predatory Pricing Act (HB 895) 
• Scope: For the prohibition of Food/Large grocery retailers and third-party food delivery services from engaging in dynamic pricing or using personal data to set a price for consumer goods or serviced. 
  • Prevents the use of protected class data (i.e. race, gender, or ethnicity) to offer, advertise, or sell a consumer good or service. 
  • Violation of this act would be considered an “unfair, abusive, or deceptive trade practice that is subject to enforcement and penalties under the Maryland Consumer Protection Act.” 
  • However, this allows price differences based on discounts, loyalty programs, subscriptions, consumer consent, costs, location, supply and demand, and corrections to pricing errors or system outages. 
• Attorney General Authority: Enforced exclusively by the Consumer Protection Division of the Office of the Attorney General (the “Division”), as there is no private right of action for individual lawsuits. 
• Cure Period: The Division shall provide the alleged violator 45 days after the Notice Of Violation is received to cure the violation. 
• Effective: October 1, 2026 

Connecticut: 

• Surveillance Pricing Ban (P.A. 26-130, Sec. 11 of HB 5563) 
• Scope:  
  • Bars retail sellers (including retail food establishments) and third-party delivery services from engaging in surveillance pricing. 
  • Businesses using consumers’ personal data to increase online prices must disclose that the price was increased using their personal data, subject to certain exceptions.  
  • The recommended disclosure must be readily visible to the average consumer and should state: “THIS PRICE WAS INCREASED USING YOUR PERSONAL DATA”. 
  • Surveillance pricing does not include discounts, loyalty programs, price differences based on costs or supply and demand, or corrections to pricing errors or system outages. 
  • Violation shall constitute an unfair or deceptive trade practice for the purposes of § 42-110b(a) of the general statutes 
• Attorney General Authority: Enforced exclusively by the Connecticut State Attorney General, as there is no private right of action for individual lawsuits. 
• Effective: July 1, 2027 

New Jersey: 

• Fair Price Protection Act (A4085 / A4523) 
• Scope: 
  • Retail food stores, third-party grocery delivery, and foodstuffs platforms cannot use personal data (such as online search history, location, or inferences about income and family structure) to set or adjust individual prices for the same or similar products or services. (allows one cost based change every 24 hours). 
  • Provides definition for “Clear and conspicuous” which means: “in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.” 
  • Excludes price differences based on reasonable costs, group discounts, and loyalty programs, provided that eligibility and pricing conditions are clearly disclosed, discounts are applied uniformly, and consumer data is used only for administering discounts.  
  • One year ban on electronic shelf labels. 
• Authority: Enforced by:  
  • (1) the New Jersey State Attorney General, if has reason to believe that the interest of the residents of this State has been or is threatened or adversely affected by an act or practice of a retail food store or third-party grocery delivery platform, and  
  • (2) a consumer in a civil action, if aggrieved by a retail food store or third-party grocery delivery platform by an act or practice in violation. 
• Civil Fines: 
  • Attorney General Action: The Attorney General may seek injunctive relief, compliance, and damages of $3,000 per violation or actual damages, whichever is greater, plus other appropriate penalties or relief. 
  • Consumer Action: Consumers may seek injunctive relief, $3,000 per violation or actual damages, whichever is greater, and up to triple damages for willful violations, plus attorney’s fees and litigation costs.  
    • Consumers have five years from discovering or reasonably being able to discover the violation to file suit. 
• Effective: August 1, 2027 (shelf label moratorium start Feb 1, 2027) 

Seattle, Washington:  

• Fair Pricing and Transparency Ordinance (Ordinance 127515) [Seattle Only] 
  • Bans the use of personal data (including browsing history, location, employment status, race, gender, social media activity, or chatbot conversations) to alter or set individual grocery prices 
  • Covered Businesses: Large grocery chains with 20 or more locations worldwide, box stores with grocery departments, and online grocery delivery services. 
  • Exempts Small mom-and-pop grocery stores, local convenience stores, and farmers’ markets. 
  • A covered retailer must clearly and conspicuously disclose via its website or where the discount is offered, in a manner an ordinary consumer would notice and understand, the eligibility requirements for promotional and group discounts, as well as the criteria for discount tiers based on prior purchase history. 
• Authority: 
  • (1) The City Attorney, who may investigate violations; and 
  • (2) Consumers who suffer an injury from a violation and bring a civil action against covered grocery businesses or delivery service providers. 
• Civil Fines: 
  • City Attorney Action: The City Attorney may seek injunctive or other appropriate relief, damages, attorney’s fees, enforcement costs, and penalties of up to $3,000 per violation and $10,000 for subsequent violations. 
  • Consumer Action: Consumers may seek damages, attorney’s fees, and penalties of up to $3,000 per aggrieved party and $10,000 for subsequent violations, capped at $1 million per action. 
    • Courts may award up to $10,000 in liquidated damages instead of actual damages. 
    • Both actions must be filed within three years of the violation. 
    • Penalty amounts are adjusted annually for inflation. 
• Effective September 1, 2027 

States/Cities with Active Bills:  

• Delaware — HS 1 for HB 453 would restrict automated individualized pricing based on personal data or related inferences, with exceptions for specified uniform discounts. 
• District of Columbia — B26-0667 would prohibit covered businesses from using consumer personal information to set individualized prices for consumer goods. 
• Illinois — HB 4248 and SB 2255 propose restrictions on surveillance pricing for consumer goods and services, while recognizing exceptions for pricing based on nonpersonal market factors. 
• Michigan — HB 6098 and HB 6099 would restrict the use of consumer data to set individualized prices in specified retail transactions. 
• North Carolina — SB 835 would prohibit surveillance pricing for essential goods and services, subject to exceptions for promotional discounts and cost-based price differences. 
• Pennsylvania — HB 1942 and HB 1779 propose different approaches to surveillance pricing, including restrictions on certain data-driven pricing and disclosure requirements for personalized algorithmic prices. 
• Virginia — HB 121 and SB 838 propose prohibitions on using personal information to set individualized consumer prices, with certain exception. 
• New York City — Int. No. 891-2026 proposes prohibitions on businesses from charging different prices, fees, or discounts to consumers based on personal data collected through surveillance technologies.