Instacart to pay $60 million to settle FTC claims it defrauded consumers

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

The Federal Trade Commission (FTC) stated that Instacart’s ‘free delivery’ claims are misleading because customers still have to pay a mandatory service fee that can add up to 15% to their order total.

The agency also said the delivery platform’s “100% satisfaction guarantee” promise is false because it implies it will provide full refunds when consumers are not fully satisfied with their orders, which is typically not the case when people receive delayed deliveries or unprofessional service.

In addition, Instacart hid the refund option from the “self-service” menu that consumers use to report problems with their orders, leading people to believe they could only get a credit toward a future order instead of a refund, the FTC alleged.

Instacart also failed to disclose terms related to the sign-up process for Instacart+ membership, the agency said. The sign-up process for the free trial of the subscription service did not disclose that consumers would be charged once the trial period ended, allowing Instacart to charge people without their informed consent. Those consumers will receive refunds as a result of the settlement, the FTC said.

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

Instacart acknowledged the settlement in a blog post and denied “any allegation of wrongdoing.” The company also said it believes “the basis of the FTC’s investigation was fundamentally flawed.”

The settlement comes as Instacart is currently under fire over a recent investigation that revealed its AI-powered pricing tool is causing some customers to receive different prices for the same items at the same stores. Instacart responded to the controversy by stating that merchants determine their own prices and any pricing tests conducted through its AI tool are random and not influenced by user data. Reuters reported on Wednesday that the FTC has opened an investigation into the delivery platform’s AI pricing tool.