With household budgets stretched thin, data-driven pricing delivers vital, targeted discounts directly to consumers. Yet regulatory scrutiny now threatens these benefits.
Regulators increasingly treat everyday personalized discounts—loyalty perks, birthday coupons, and purchase history deals—as inherently suspect, using loaded language that smears all data-driven pricing as exploitative. These proposals risk banning the very tools that make groceries, meals, and daily essentials more affordable.
We recently submitted comments to the Federal Trade Commission (FTC) on its “Proposed Enforcement Policy Statement Regarding Personalized Pricing,” providing further background to regulators on the benefits of this everyday business practice.
Tailoring discounts to individual shoppers is nothing new. Sellers have always done it — a neighborhood butcher throwing in an extra cut for a loyal regular, a merchant offering a deal to a student, or a shopkeeper extending a discount to a hesitant customer on the fence. Personalized pricing software simply automates this decades-old practice with real-time precision.
Personal Data Powers Real Discounts, Not Price Gouging
Consider one of retail’s most popular personalized perks: the birthday discount. When a merchant offers a coupon during a customer’s birthday month, it is using a single piece of personal data, a birth date, to deliver a targeted price reduction. Data-driven pricing is what makes tailored savings possible in the first place. Without it, retailers could not offer targeted discounts based on purchase history, loyalty status, or anniversary milestones. Eliminating that capability wouldn’t create fairness; it would simply replace targeted savings with higher uniform prices for everyone.
Vague Definitions Create a Compliance Trap
The central problem with recent regulatory proposals is the absence of a workable definition. Proposals describing “personalized pricing” as any use of personal data to set a price fail to distinguish between a price increase and a discount. Under such an broad standard, a routine $5 birthday coupon gets lumped into the same regulatory bucket as an algorithmic price hike. By treating any price tailored to an individual as inherently suspect, regulators blur the line between exploiting shoppers and rewarding them.
This ambiguity hits small businesses hardest. While large chains can absorb the legal and technical costs of redesigning checkout systems to meet vague mandates, independent grocers and local shops cannot.
Mandatory Warnings Would Backfire on Consumers
Layering warning requirements onto every discount will produce the same outcome as standard privacy notices:consumers click past notices they do not read, creating friction without protection—a dynamic known as “disclosure fatigue.”
Perhaps most counterproductively, mandatory disclosure requirements could actively mislead shoppers. A generic warning stating that “this price was set using your personal data” paints every interaction with the same ominous brush—whether a customer is being offered a money-saving discount or charged standard retail. Alarmed by one-size-fits-all warnings, consumers may wrongly assume they are being penalized and opt out of data sharing, forfeiting discounts they would otherwise receive.The result would be higher costs for the consumers that regulators are trying to protect, at the exact moment affordability is a top national priority.
Existing law already addresses the harms regulators say they’re targeting. Federal antitrust law and state consumer protection statutes already prohibit price-fixing, deceptive pricing, and the use of protected characteristics like race or religion to set discriminatory prices. Layering a sweeping new disclosure mandate on top of these protections just risks discouraging the flexible discounting models that keep modern retail competitive.
Preserving data-driven pricing means preserving real savings for real families. Policymakers should resist heavy-handed mandates that treat personalized savings as a threat. Instead, regulators should champion the free enterprise principles that let data-driven tools keep prices low, inventory efficient, and discounts flowing directly to the consumers who rely on them.
Small Businesses Utilize Personalized Pricing to Benefit Consumers
Small businesses rely on personalized discounts as an affordable way to build customer loyalty, drive sales, and remain competitive against dominant industry players. As we submitted comments to the FTC on personalized pricing, so too did small business owners across the country. Their comments demonstrate how tailored pricing models help them better serve shoppers while passing along genuine savings.
For instance, Christine Krogue, owner of Mama Moon Boutique, uses basic order histories to offer customers perks, such as “thank-you” codes after a customer’s first order, birthday coupons, and “win-back” discounts for shoppers who haven’t visited in a while. Similarly, Phenomenal Foods Co. uses broad, segment-based incentives like win-back promotions after 90 days of inactivity. Both owners emphasize that these tools simply digitize long-standing offline courtesies, like a shopkeeper offering a small perk to a regular, allowing niche brands to reward customer loyalty without inflating base prices.
This dynamic is especially effective when helping shoppers complete a purchase they are already considering. Proof Culture, a small sneaker care company, uses site activity data to automatically send a 10% discount code to customers who have left items sitting in their online shopping cart, while Ameribag utilizes abandoned cart signals and past order histories to extend targeted price reductions to select shoppers.
Across all these small businesses, every personalized price a customer sees is at or below the standard rate available to everyone else. Far from being predatory, data-driven tools allow retailers of all sizes to deliver real savings directly to their customers’ carts, keeping products affordable while helping small businesses thrive.
Image via Unsplash.