Instacart Agrees to $60 Million Settlement with FTC Over Deceptive Practices
Instacart has reached a $60 million settlement with the Federal Trade Commission (FTC) to resolve allegations of misleading advertising and unlawful subscription enrollment practices. The FTC accused the grocery delivery platform of employing deceptive tactics that led consumers to incur additional fees and difficulties in obtaining refunds.
The commission highlighted instances where Instacart purportedly advertised “free delivery” for first-time orders, despite shoppers still being charged a mandatory service fee. Furthermore, the FTC alleged that Instacart falsely promised full refunds to customers experiencing issues with their orders.
“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,” stated Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection.
In response, Instacart issued a blog post acknowledging the settlement but asserting that it denies any allegations of wrongdoing. The company maintained that its marketing, pricing, and refund policies are transparent and compliant with the law. An Instacart spokesperson commented, “This settlement allows us to move forward and remain focused on what’s important to our company: delivering value for customers, shoppers and retail and brand partners in the communities we serve.”
This settlement comes at a critical time for Instacart, as the company is reportedly facing a separate FTC investigation into its pricing practices. This new probe reportedly stems from a recent study indicating that Instacart’s AI-powered pricing tools resulted in customers paying different prices for identical items from the same store. News of the FTC investigation had previously caused Instacart shares to decline in extended trading.
The FTC has intensified its scrutiny of companies engaging in deceptive billing and subscription schemes. This action follows previous lawsuits filed by the agency against Uber for allegedly charging users for subscriptions without consent, and against Live Nation and Ticketmaster for alleged bait-and-switch pricing and illegal coordination with ticket brokers. Earlier this month, the FTC also announced it was returning over $27.6 million to consumers who were unknowingly charged for unauthorized billing schemes related to health and wellness products.
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