Instacart to Pay $60 Million to Settle FTC Claims It Deceived Consumers

Instacart will pay $60 million in refunds to settle allegations by the U.S. Federal Trade Commission (FTC) that it deceived consumers with false advertising. The federal agency alleged that Instacart misled consumers with unlawful tactics, causing them to pay higher fees while also denying refunds.

The FTC stated that Instacart’s “free delivery” claims were misleading because customers were still required to pay a mandatory service fee that could amount to 15% of their total order. Additionally, the agency classified the delivery platform’s “100% satisfaction guarantee” as false because it implied full refunds when consumers were not fully satisfied with their orders. This was not typically the case when customers experienced late deliveries or unprofessional service.

The FTC further alleged that Instacart concealed the refund option within the “self-service” menu, which consumers use to report issues with their orders. This made it appear that customers could receive only a credit toward future orders rather than a refund.

Additionally, Instacart failed to clearly disclose the terms governing the Instacart+ membership enrollment process. The sign-up process for the free trial of the subscription service did not inform consumers that they would be charged upon trial expiration, thereby allowing Instacart to charge consumers without their informed consent. As part of the settlement, these consumers will receive refunds.

“The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, in a statement.

Instacart acknowledged the settlement in a blog post, though it denied “any allegations of wrongdoing.” The company also stated that it believes “the foundation of the FTC’s inquiry was fundamentally flawed.”

This settlement comes as Instacart is currently under fire for a recent study that revealed its AI-powered pricing tool is causing some customers to receive different prices for the same items at the same stores. In response to the controversy, Instacart stated that retailers set their own prices and that any pricing tests conducted through its AI tool are random, not influenced by user data. Reuters reported that the FTC has begun an investigation into the delivery platform’s AI pricing tool.