Instacart Settles $60 Million FTC Claim Over Deceptive Fees

UPDATE: Instacart has just settled a staggering $60 million with the Federal Trade Commission (FTC) amid serious allegations of deceptive marketing practices. This urgent development follows claims that the grocery delivery giant misled customers about free deliveries while obscuring service fees that could inflate total orders by as much as 15%.

The FTC’s investigation revealed that Instacart not only marketed free delivery services but also covertly charged customers for Instacart+ memberships following free trials, often without delivering the promised benefits or refunds. This settlement includes customer refunds and is a direct response to these deceptive practices, according to reports from the San Francisco Chronicle.

In a statement, Instacart maintains its innocence, asserting that it aims to focus on its business moving forward. The company emphasized its commitment to transparency, claiming, “We provide 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.”

However, this fallout has not been easy on the company’s stock, with shares dropping nearly 2% following the news of the settlement. The revelation has also spurred renewed scrutiny of Instacart’s pricing practices, particularly its use of artificial intelligence in its pricing tool known as Eversight.

In a separate investigation, the FTC is looking into Eversight’s variable pricing system, which has reportedly led to price disparities of up to 23% for identical products at the same store. This alarming trend has drawn the ire of both the FTC and the public, raising questions about fairness in pricing.

Instacart has defended its Eversight tool, stating that its pricing tests are random and not influenced by individual user data or behaviors. The company noted, “This year, we’ve focused heavily on encouraging more retailers to move toward in-store and online price parity, working closely with partners to remove markups and align online prices with in-store,” as reported by Reuters.

As Instacart grapples with these controversies, customers and investors alike are left to ponder the implications of these deceptive practices. The company’s future now hinges on its ability to regain consumer trust and clarify its pricing strategies.

Stay tuned as this story develops, and watch for updates on how Instacart plans to address these critical issues.