Instacart to pay $60 million to settle FTC claims it deceived shoppers

By Jody Godoy

Dec 18 (Reuters) – Instacart has agreed to pay $60 million in refunds to settle the U.S. Federal Trade Commission’s allegations that the online grocery delivery platform deceived consumers about its Instacart+ membership and free delivery offers, according to court documents filed in San Francisco on Thursday.

Instacart’s offer of “free delivery” for first orders was illusory because shoppers were charged other fees, the FTC alleged. The company did not adequately notify shoppers that free trials of its Instacart+ subscription service would convert to paid memberships, and misled consumers about its refund policy, the agency said.

“The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms,” said Christopher Mufarrige, who leads the FTC’s consumer protection work. 

An Instacart spokesperson said the company flatly denies any allegations of wrongdoing, but that the settlement allows the company to focus on shoppers and retailers.

“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,” the spokesperson said.

The shopping platform is under scrutiny over a recent study by nonprofit groups where individual shoppers simultaneously received different prices for the same items at the same stores. The FTC is investigating the company and has demanded information about Instacart’s Eversight pricing tool, Reuters reported on Wednesday. 

Instacart has said that retailers are responsible for setting prices, and that pricing tests run through Eversight are random and not based on user data.

(Reporting by Jody Godoy in New York; Editing by Nia Williams, Kirsten Donovan and Nick Zieminski)