Instacart has agreed to pay 60 million dollars in refunds to settle allegations by the U.S. Federal Trade Commission that the grocery delivery platform misled consumers through deceptive advertising practices and refund policies. The settlement addresses claims that customers paid higher fees than advertised and were denied refunds they believed were guaranteed.
FTC Allegations On Fees And Advertising
The FTC said Instacart’s “free delivery” claims were misleading because customers were still required to pay a mandatory service fee. According to the agency, that fee could add up to as much as 15 percent of an order’s total cost.
The commission also said Instacart’s “100% satisfaction guarantee” created the impression that consumers would receive full refunds if they were dissatisfied. The FTC said that refunds were typically not provided in cases involving late deliveries or unprofessional service.
Refund Access And Self-Service Claims
The FTC alleged that Instacart made it harder for customers to obtain refunds by removing the refund option from the self-service menu used to report order problems. The agency said this design choice led consumers to believe they were only eligible for credits toward future orders rather than cash refunds.
Subscription Enrollment Disclosures
The agency also said Instacart failed to clearly disclose key terms related to enrollment in its Instacart+ membership. According to the FTC, the free trial sign-up process did not adequately inform consumers that they would be charged once the trial ended. As a result, some users were billed without informed consent and will receive refunds under the settlement.
Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said the agency is monitoring online delivery services to ensure transparent competition on pricing and delivery terms.
Company Response To The Settlement
Instacart acknowledged the settlement in a blog post and denied any allegations of wrongdoing. The company said it believes the basis of the FTC’s inquiry was flawed, while agreeing to the terms of the settlement.
Related Scrutiny Of AI Pricing Practices
The settlement comes as Instacart faces additional scrutiny following a recent study that found some customers were shown different prices for identical items at the same stores. Instacart has said retailers control their own pricing and that any tests conducted through its AI-powered pricing tool are randomized and not based on user data.
Reuters reported on Wednesday that the FTC has begun an investigation into Instacart’s AI pricing tool.
Featured image credits: Pexels
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