Instacart has agreed to pay 60 million dollars in refunds to settle allegations from the U.S. Federal Trade Commission that it used deceptive advertising. The FTC accused the company of misleading consumers with unlawful tactics, resulting in customers paying higher fees and being denied refunds.
According to the FTC, Instacart’s claims of “free delivery” were misleading because customers were still required to pay a mandatory service fee. This fee could increase their total order cost by up to fifteen percent.
The agency also stated that the delivery platform’s “100% satisfaction guarantee” was false. This promise implied that full refunds would be given for any dissatisfaction, but that was typically not the case for issues like late deliveries or unprofessional service.
Furthermore, the FTC claimed Instacart hid the refund option within the self-service menu customers use to report order problems. This led people to believe they could only receive a credit for a future order instead of a monetary refund.
The FTC said Instacart failed to clearly disclose the terms for its Instacart+ membership enrollment. The sign-up process for the free trial did not inform consumers they would be automatically charged once the trial ended, leading to charges without informed consent. Affected consumers will receive refunds as part of this settlement.
Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, stated the FTC is focused on ensuring online delivery services are transparent about their prices and delivery terms.
Instacart acknowledged the settlement but denied any allegations of wrongdoing. The company also said it believes the foundation of the FTC’s inquiry was fundamentally flawed.
This settlement arrives as Instacart faces separate scrutiny over a recent study. The study revealed the company’s AI-powered pricing tool causes some customers to see different prices for the same items at the same stores. Instacart responded by stating that retailers set their own prices and any pricing tests via its AI tool are random and not based on user data. Reuters reported the FTC has now begun an investigation into Instacart’s AI pricing tool.