Shoppers can be charged different prices for the same groceries, rides and rooms based on personal data, a practice drawing scrutiny from regulators and lawmakers, and now prompting a response from major retailers.
Consumer Reports has documented one example: a $4.30 gallon of milk for which one shopper pays full price while two others receive personalized discounts and pay $3.66 and $3.22 for the same item.
Walmart CEO John Furner pledged in a letter posted to the company’s corporate website Sept. 25 that the retailer will not use artificial intelligence or personal data to set individualized prices, a promise that landed the same day the public comment period closed on a federal proposal saying companies using personalized pricing should disclose when they do so.
Companies have told the Federal Trade Commission that personalized pricing tools increased revenue by 2% to 5% and profit margins by 1% to 4%, Consumer Reports has reported.
The Federal Trade Commission’s proposed enforcement policy statement, issued Aug. 19, would not ban personalized pricing but says companies should disclose when a price is personalized, the basis for it and what data was used to set it, and that failing to do so could violate federal consumer-protection law.
“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,” FTC Chairman Andrew Ferguson said in a statement announcing the proposal. The FTC did not respond to a request for comment for this story.
Consumer Reports spent the past year investigating personalized pricing in retail, finding that Instacart ran price experiments on shoppers at major grocery chains, Kroger used its loyalty program to tailor promotions and discounts, and Uber and Lyft used algorithms to offer different prices for the same ride at roughly the same time. Kroger told Consumer Reports it does not personalize base prices but does personalize discounts for loyalty members, using purchase history as the primary factor alongside demographics and online behavioral data.
Walmart holds a 2023 patent, US 11,687,872 B2, that describes technology for remotely changing electronic shelf label prices based on what a customer already has in their cart, for example, offering a different price for mayonnaise depending on whether a customer has tuna in their cart. The patent describes the technology but does not establish that Walmart has deployed it.
Furner told investors in February that customers who use Sparky, Walmart’s AI shopping assistant, have an average order value, the amount a customer spends per trip, about 35% higher than non-Sparky customers. Walmart U.S. CEO Dave Guggina told investors at a Sept. 15 conference that when customers engage with Sparky, “their average order value jumps 40%.” Neither figure shows Sparky is used to charge individual customers different prices for the same item.
Walmart does not appear to have filed its own comment in the FTC’s docket on the proposal, and did not respond to questions asking whether Furner’s pledge applies to the pricing method described in the patent or to what Sparky recommends or prices for individual customers.
If finalized, the FTC’s proposal would address personalized pricing through disclosure and enforcement under existing consumer-protection law rather than a federal ban. The agency has not said when it expects to finalize the policy. Walmart’s pledge separately commits the retailer not to use customers’ personal data to charge them more based on factors such as income, shopping history or their moment of need, though Walmart has not said whether that promise covers the pricing method described in its own patent.
