Grocery delivery company Instacart has agreed to pay $60 million in refunds to customers following allegations that it used deceptive tactics to obscure delivery and membership fees, according to the U.S. Federal Trade Commission.
The FTC announced the settlement last week, alleging that Instacart engaged in unlawful practices that increased grocery costs for consumers. The agency said Instacart advertised “free delivery” while charging a service fee that was not clearly disclosed and could add up to 15% to the cost of a delivery.
The FTC also alleged that Instacart advertised a free enrollment for its Instacart+ service without adequately disclosing that it is a paid subscription. In addition, the agency said the company made it difficult for customers to obtain refunds if they were not fully satisfied with their orders. In some cases, customers were allegedly steered toward smaller credits for future purchases rather than full refunds.
“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,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection.
An Instacart representative was not immediately available to explain how eligible customers would be identified or how refunds would be processed. Instacart said in a statement provided to the Associated Press that it offers transparent pricing, clear terms, easy cancellation, and refund policies that comply with the law.
The FTC said customers may find updates on refunds through the agency’s refunds process page.
Earlier this month, Instacart also faced scrutiny over allegations that it charged different customers different prices for identical items. The claims were based on a study conducted by Consumer Reports, Groundwork Collaborative, and the nonprofit news organization More Perfect Union. The study reported price differences of up to 23% for the same items.
Instacart described the differences as negligible and acknowledged that it facilitated randomized online pricing tests with a subset of 10 retail partners. The company said the tests were intended to improve affordability and stated that prices did not change in real time or in response to supply and demand.
