Jan 8 (Reuters) – New York Attorney General Letitia James demanded information from Instacart on Thursday, saying it may have violated the state’s law requiring online retailers to disclose when they use consumers’ information to set prices. The move comes after the online grocery and retail delivery platform faced intense criticism over a study in […]
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New York AG demands Instacart hand over information about price tests
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Jan 8 (Reuters) – New York Attorney General Letitia James demanded information from Instacart on Thursday, saying it may have violated the state’s law requiring online retailers to disclose when they use consumers’ information to set prices.
The move comes after the online grocery and retail delivery platform faced intense criticism over a study in four U.S. cities by Consumer Reports and other nonprofits. It showed that Instacart displayed different prices to shoppers for the same groceries, resulting in a 7% average cost difference across shoppers for the same grocery list at the same store.
Instacart said in December it had stopped price experiments, including those through its Eversight artificial intelligence pricing tool. The tests were randomized and never based on personal data or characteristics, Instacart said.
The company nevertheless included a New York-mandated disclaimer that prices were “set by an algorithm using your personal data” on some of its store pages, stating that “certain prices and/or fees may vary based on randomized tests, we use personal information (such as delivery address) to calculate fees, and we offer certain personalized incentives.”
James said those disclaimers may not be sufficiently clear as required by New York law.
“Instacart’s pricing experiments raise serious concerns about its use of algorithmic pricing, and I will not hesitate to take action to enforce our laws and protect consumers,” James said.
She also called on the company to hand over its pricing agreements with retailers and brands, and explain how it chose which customers were included in pricing experiments.
An Instacart spokesperson said on Thursday the company believes it is in full compliance with New York’s Algorithmic Pricing Disclosure Act, and looks forward to responding to James’ questions “to further clear up any misunderstandings about our prior and current practices.”
(Reporting by Jody Godoy in New York; Editing by Cynthia Osterman)