Instacart to pay $60M to settle FTC claims it deceived consumers

Instacart has agreed to pay $60 million in refunds to resolve allegations from the U.S. Federal Trade Commission (FTC) regarding deceptive advertising practices. The FTC accused the grocery delivery service of misleading consumers, leading them to incur higher fees while denying them refunds. According to the FTC, Instacart's advertisements claiming 'free delivery' were misleading as customers were still subjected to a mandatory service fee, which could increase their total order by up to 15%. Furthermore, the agency pointed out that Instacart’s promise of a '100% satisfaction guarantee' was inaccurate; it suggested that customers would receive full refunds if they were dissatisfied with their orders, a claim that often did not hold true, especially in cases of late deliveries or inadequate service. The FTC also highlighted that Instacart obscured the refund option in the self-service menu customers use to report issues with their orders. This led many to mistakenly believe they could only receive credits toward future purchases instead of actual refunds. Additionally, the company was criticized for not clearly disclosing the terms related to the Instacart+ membership sign-up, where customers were not informed they would be charged after the free trial period. As a result of this settlement, consumers affected by these practices will receive refunds. "The FTC is vigilant in ensuring that online delivery services provide clear and honest pricing and delivery terms," stated Christopher Mufarrige, Director of the Bureau of Consumer Protection at the FTC. Instacart acknowledged the settlement in a blog post but denied any wrongdoing, arguing that the basis for the FTC’s inquiry was flawed. This settlement comes amid scrutiny of Instacart's AI-driven pricing tool, which has reportedly led to price discrepancies for the same items in the same stores. Instacart responded by asserting that pricing is determined by retailers and that their AI pricing tests are random and not based on user data. Additionally, Reuters reported that the FTC has initiated an investigation into the AI pricing tool used by the platform.