Instacart Agrees to Refund Customers $60 Million
Instacart has agreed to refund customers $60 million to resolve allegations that the grocery shopping service used deceptive marketing and billing practices, the Federal Trade Commission said Thursday. The agency claimed in a suit that Instacart charged hidden fees and refused to issue refunds, increasing grocery costs for consumers and harming shoppers.
Deceptive Marketing Practices
“Instacart misled consumers by advertising free delivery services — and then charging consumers for grocery delivery — and failing to tell consumers who signed up for a free trial that they would be automatically enrolled in the subscription program,” according to the FTC. The FTC said Instacart’s promise of free delivery to shoppers who place an order through the platform for the first time amounted to false advertising because the offer involved paying a "service fee" to receive their groceries.
Failure to Stand by Satisfaction Guarantee
Instacart also failed to stand by its "100% satisfaction guarantee" because it implied that it offered a full refund to dissatisfied customers, which the company failed to provide. Instead, customers whose orders were late or incomplete only received a small credit that they could use toward a future order.
Company Response
Instacart denied the FTC’s allegations, stating that the company offers "simple marketing, transparent pricing and fees, clear terms, easy cancellation and generous refund policies – all in full compliance with the law and above industry norms." The company also stated that it flatly denies all allegations of wrongdoing by the Federal Trade Commission and stands firmly behind the integrity and transparency of its programs.
Settlement Terms
Under the proposed settlement, Instacart is prohibited from misrepresenting its delivery service costs and satisfaction guarantees. The company must also obtain consent from shoppers before they sign up for an Instacart subscription. Additionally, Instacart charged consumers without their consent for Instacart+ subscriptions, which offer perks such as free or low-cost delivery.
Pricing Concerns
The FTC also raised concerns after an investigation found that the company was testing technologies that could cause different consumers to pay significantly different prices for the same foods. Instacart stated that 10 of its retail partners are testing this pricing approach, describing such practices as a standard way stores evaluate customer preferences.
