Instacart to Pay $60 Million in FTC Consumer Protection Case

Grocery delivery firm Instacart will pay $60 million to refund consumers who were deceived into enrolling in the company’s subscription service, Instacart+, the US Federal Trade Commission said.

The consumer protection agency said the company that operates Instacart, Maplebear Inc., misled consumers by saying their first order was “free” despite charging a mandatory grocery delivery fee, according to a complaint and settlement filed in California federal court Thursday. Instacart also failed to clearly disclose the terms of its Instacart+ subscription service and refused to offer refunds, instead giving consumers a credit toward a future order, the FTC said.

“We flatly deny any allegations of wrongdoing by the agency, and we believe the foundation of the FTC’s inquiry was fundamentally flawed,” the company said in a statement. “We stand firmly behind the integrity, transparency and value of our programs.”

Instacart has faced renewed scrutiny over its pricing after a December report by the nonprofit group Consumer Reports that the company’s AI-enabled experiments charge customers different prices for the same product. The company said the report “inaccurately blurred together fundamentally different things: A/B price tests, dynamic pricing, and surveillance pricing.”

Reuters earlier reported that the FTC sent inquiries to Instacart regarding its use of AI-enabled pricing tools.

The Instacart lawsuit and settlement are the latest by the FTC to take on popular digital subscriptions that it alleges are too hard to cancel. In September, Amazon.com Inc. agreed to pay $2.5 billion to resolve allegations that its popular Prime subscription was too difficult for consumers to cancel. The agency also has a case pending against Adobe Inc. over annual subscriptions to its creative software such as Photoshop.

Adobe is challenging the FTC’s claims in court and the company says it’s transparent with its subscription agreement terms and cancellation process.

Uber Technologies Inc. also faces similar scrutiny by the agency over its subscription practices from an April lawsuit. Earlier this week, 21 US states and the District of Columbia joined the FTC lawsuit. Uber is contesting the case and has denied any wrongdoing.

Top photo: An Instacart delivery order pickup sign outside a grocery store in New York, on Thursday, Aug. 8, 2024. Photographer: Yuki Iwamura/Bloomberg.