Additional Coverage:
- Instacart to pay $60 million to settle claims it deceived customers with false advertising (marketrealist.com)
Instacart to Pay $60 Million in Settlement Over Deceptive Practices
Instacart, a popular grocery delivery service, has agreed to a $60 million settlement with the Federal Trade Commission (FTC) to resolve allegations of deceptive advertising and misleading consumers about delivery costs and subscription fees. The settlement mandates consumer refunds and requires Instacart to implement clearer disclosures for its services.
The FTC’s investigation found that Instacart allegedly misled customers by advertising “free delivery” while simultaneously charging a “service fee,” making the delivery anything but free for first-time users. Furthermore, the company is accused of automatically enrolling consumers into its Instacart+ subscription program after a “free trial” without explicit consent, leading to unexpected charges for hundreds of thousands of users.
Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, stated, “Instacart misled consumers by advertising free delivery services – and then charging consumers to have groceries delivered – and failing to disclose to consumers that signed up for a free trial that they would be automatically enrolled into its subscription program.”
Additional allegations include Instacart violating its “100% satisfaction guarantee” by providing only modest credits instead of full refunds for unsatisfactory or delayed orders, and charging for Instacart+ subscriptions without customer consent.
Instacart, in a statement to the publication, denied any wrongdoing, asserting its commitment to “straightforward marketing, transparent pricing and fees, clear terms, easy cancellation, and generous refund policies – all in full compliance with the law and exceeding industry norms.” An Instacart spokesperson added, “This settlement allows us to move forward and remain focused on delivering value for our customers, shoppers, and retail and brand partners in the communities we serve.”
The settlement requires Instacart to obtain explicit customer consent for all Instacart membership enrollments and to cease misrepresenting delivery charges or satisfaction guarantees. The FTC also raised concerns about Instacart’s use of technology testing, which could result in varying prices for the same groceries among different consumers.
Instacart defended this practice, stating it’s a common strategy used by its eleven store partners to align with consumer preferences. The FTC’s investigation into these algorithm-driven pricing techniques was reportedly initiated after a study revealed customers were paying different prices for comparable items.