FTC orders Target, Walmart to detail personalized pricing practices

By Nathan Brooks

The FTC has given Walmart and Target 45 days to provide details on whether personal data and artificial intelligence may shape prices, under a 15-page order that also covers worker compensation and loyalty programs.

The retailer orders form part of a broader FTC inquiry into the use of personal data in setting prices. The agency also sent orders to several airline companies, ride-sharing firms and food delivery entities, extending the request beyond retail.

The 15-page order asks for information on three points:

• Whether “pricing for a ticket, ride share, food delivery or other product or service varies from one person to the next” based on analysis of personal data from artificial intelligence and more.
• How companies adjust or set compensation based on personal information.
• How prices can vary based on factors such as loyalty programs.

FTC Chairman Andrew Ferguson said in a Wednesday press release: “We intend to scrutinize the opaque methodology that some companies in these industries may be using to determine how much consumers pay or how much gig workers are paid for the same product or service.”

“Consumers deserve to know whether companies use their web surfing habits or other personal data to estimate the highest price they can charge each consumer. Workers also deserve to know if their compensation is affected by how companies use their personal data,” Ferguson said.

Recipients have 45 days from the date they receive their orders to respond. The FTC can seek to compel compliance in federal court if needed, according to the agency’s announcement.

What does the order change for shoppers?

For now, it changes the disclosure clock, not the current shelf price. The order does not establish that either retailer varies prices by person; it seeks information to assess that possibility.

For shoppers and gig workers, the practical change is federal scrutiny with a court-enforcement backstop. The order gives consumers no new evidence that their shopping histories change what they pay. It creates a route to answers, and a route to court if a company ignores the request.

Retailer positions

Target directed Retail Dive to a fact sheet it published earlier this month. The sheet states: “Target does not use personal information to raise prices for guests based on who they are, where they live or when they shop.”

The same sheet says Target prices can vary based on local costs, pricing regulations and competition. It also states that the Target Circle loyalty program “can use your shopping history to help surface deals and offers that are more relevant to you and that help you save — not to raise your price.”

Target draws a line between individualized offers and individualized prices. Its position is that shopping history produces more relevant promotions, not a higher bill. The FTC’s request will test the distinction rather than accept it as the final word.

Walmart did not immediately respond to Retail Dive’s request for comment on the order to file a special report. Over the past month, the mass retailer has publicly defended itself against allegations of personalized pricing and concerns about how digital price tags on shelves may play a role.

The order lands in the middle of that defense. It contains no finding that Walmart has used shelf data to charge individual shoppers more. The requested records may supply the evidence that public debate currently lacks.

The move follows the FTC’s August decision to seek public comment on personalized pricing. Earlier this week, the FTC joined 20 U.S. states in suing Dollar General for allegedly engaging in deceptive pricing practices.

Taken together, the agency is collecting comments, requesting company data and litigating alleged deception. For Target and Walmart, their public defenses now meet a document request with a 45-day clock and potential federal court enforcement.

The next checkpoint is each recipient’s response, due 45 days after receipt. The more consequential issue is whether those responses connect personal data, AI, loyalty programs and browsing histories to individual prices and worker compensation. Until then, the FTC has a demand for answers rather than a public finding.