Instacart has agreed to a $60 million settlement with the Federal Trade Commission (FTC) over allegations of deceptive marketing and unclear fee disclosures. The settlement includes customer refunds and follows claims by the FTC that Instacart falsely advertised free deliveries while hiding service fees that could inflate orders by up to 15%. Additionally, Instacart is said to have covertly charged customers for Instacart+ memberships after free trials, without providing the promised benefits or refunds, as recently reported by the San Francisco Chronicle.
Despite denying any wrongdoing, Instacart has stated that it wishes to move on and focus on its business. The company asserted its commitment to transparency in its service fees and terms. They claimed, "We provide straightforward marketing, transparent pricing and fees, clear terms, easy cancellation and generous refund policies – all in full compliance with the law and exceeding industry norms," according to the San Francisco Chronicle. However, this has not shielded the company from adverse market reactions, as their shares dropped nearly 2% following the news.
In parallel, Instacart's pricing practices are under renewed scrutiny. A separate investigation has been initiated by the FTC on the company's use of artificial intelligence in its pricing tool, Eversight, according to Reuters. Earning the ire of the FTC and the public, this tool has enabled variable pricing on identical products, as a recent study revealed price deviations of up to 23% for the same items at the same store.
Caught in the throes of controversy, Instacart has defended its Eversight pricing tool, explaining that these price tests are random and not based on user data or behaviors. "This year, we’ve focused heavily on encouraging more retailers to move toward in-store and online price parity, working closely with partners to remove markups and align online prices with in-store," Instacart mentioned, per Reuters.
