Instacart pays $60 million in settlement with FTC for defrauding consumers

Instacart will pay $60 million in restitution to resolve Federal Trade Commission allegations that it deceived consumers with false advertising. Federal authorities alleged that Instacart used illegal tactics to deceive consumers into paying higher fees while refusing to refund them.

The Federal Trade Commission (FTC) said Instacart’s “free shipping” claim is misleading because customers still need to pay a mandatory service fee of up to 15% of the total order value.

The agency also said the delivery platform’s promise of a “100% satisfaction guarantee” is false because it implies a full refund if the consumer is not completely satisfied with their order, which is usually not the case if the delivery is delayed or they receive unprofessional service.

Additionally, the FTC alleged that Instacart hid refund options from the “self-service” menu that consumers used to report problems with their orders, leading people to believe they would only receive credits toward future orders rather than refunds.

The agency also said Instacart did not clearly disclose the terms of the Instacart+ membership registration process. The subscription service’s free trial sign-up process did not disclose that consumers would be charged after the trial ended, allowing Instacart to charge consumers without their informed consent. According to the FTC, these consumers will receive refunds as a result of the settlement.

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

Instacart acknowledged the settlement in a blog post and denied the “allegations 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 it used AI-powered pricing tools that caused some customers to receive different prices for the same item at the same store. Instacart responded to the controversy by saying that retailers determine their own prices and that price tests conducted through its AI tools are random and not influenced by user data. Reuters reported on Wednesday that the FTC has opened an investigation into the distribution platform’s AI pricing tools.