Instacart has agreed to pay $60 million in refunds to settle claims made by the U.S. Federal Trade Commission that it misled consumers through deceptive advertising practices. The FTC alleged that Instacart used unlawful tactics, resulting in customers paying higher fees and being denied refunds.
The Federal Trade Commission (FTC) accused Instacart of misleading consumers with its ‘free delivery’ claims, as customers were still required to pay a mandatory service fee, increasing their total order amount by up to 15%.
Furthermore, the FTC stated that Instacart’s promise of a “100% satisfaction guarantee” was false, as it did not always provide full refunds to dissatisfied customers, especially in cases of late deliveries or unprofessional service.
The agency also alleged that Instacart concealed the refund option in the “self-service” menu, leading consumers to believe they could only receive a credit for future orders instead of a refund.
In addition, the FTC claimed that Instacart did not clearly disclose terms related to Instacart+ membership enrollment, as consumers were unknowingly charged after a free trial period ended. These consumers will receive refunds as part of the settlement, according to the FTC.
Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, emphasized the importance of monitoring online delivery services for transparent competition in pricing and delivery terms.
Instacart acknowledged the settlement in a blog post and denied any wrongdoing, stating that the foundation of the FTC’s inquiry was flawed.
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The settlement coincides with public scrutiny of Instacart’s AI pricing tool, which has been accused of causing price discrepancies among customers. Instacart responded by attributing pricing variations to individual retailers and random testing through its AI tool, denying any influence from user data. According to Reuters, the FTC has initiated an investigation into Instacart’s AI pricing tool following these allegations.
