Merchants have become increasingly skilled at using consumers' personal data, including their online shopping habits and smartphone use, to calculate an individual's tolerance for higher prices. Now the Federal Trade Commission is putting companies on notice that the practice could violate consumer-protection law.

In a new enforcement bulletin released Wednesday, the commission told companies that they must disclose when they use highly detailed information about individuals to personalize a price offer. The new statement puts the Trump administration's imprint on a burgeoning movement to rein in how merchants use price-setting algorithms.

Companies must offer "clear and conspicuous" disclosure of any personalized pricing, including the type of data that was used to generate the offer, the FTC said in its statement. The agency says it lacks authority to prohibit the practice, but will "deploy enforcement resources" when it spots companies that don't follow its disclosure standards.

Businesses have long set different prices for distinct groups of consumers based on their willingness to pay for a product or service. College students and senior citizens, for instance, may see lower prices for subscriptions or mobile-phone contracts.

Varying prices down to the individual level has long been the holy grail of marketing, but it has become a politically charged tactic. Companies collect vast amounts of data about consumers, including browsing history, location, device type, purchase patterns, and even how long a cursor hovers over a product. Software that automates price-setting-often driven by AI-can quickly turn that data into tailored pricing.

The FTC undertook a study of the practice during the Biden administration and found it could be used to set higher prices when merchants know that shoppers, such as new parents or first-time car buyers, are unfamiliar with a market. A full report hasn't been issued. FTC Chairman Andrew Ferguson, then a minority member of the commission, said at the time that Democrats rushed out the initial findings, but didn't take a firm view on personalized pricing. He closed an effort that his predecessor, Lina Khan, had launched on her final week in office to seek public input on personalized pricing.

Since then, Instacart was revealed to have allowed retailers to use its software to vary prices for individuals across four cities who added the same items simultaneously to their shopping carts. Instacart said the experiment helped retailers understand consumer preferences but scrapped the tests after customer pushback.

The FTC said in its statement Wednesday that a "food delivery company quoting a higher price to consumers on the basis of data personal to those consumers" would require disclosure. So would ride-share companies that charged a user more based on knowledge that the passenger didn't have a competing app on their phone.

Democrats such as Sen. Elizabeth Warren (D., Mass.) say dynamic pricing is a way to squeeze customers. Some progressives said Wednesday's announcement doesn't go far enough to prevent consumer harm.

"Today's announcement by the FTC is two years too late and not nearly enough," said Nidhi Hegde, executive director of the American Economic Liberties Project, a progressive group focused on antitrust and other consumer issues.

States have largely taken the lead on regulating price-setting algorithms. The state of New York last year required companies to disclose when they use personalized pricing. Maryland banned the use of algorithms to vary food prices at the individual level.

The FTC's new statement says it still doesn't know how often businesses use personalized pricing. But when consumers pay a higher price based on the undisclosed use of personal data, they suffer a "substantial injury," the commission said.

"The more sophisticated personalized pricing practices become, the less likely consumers are to benefit," the commission added.