Instacart Agrees to $60M Settlement in FTC Lawsuit Over Deceptive Practices
Grocery delivery platform, Instacart, has agreed to pay $60 million in consumer refunds. This decision, made on Thursday, December 19, 2024, settles allegations from the Federal Trade Commission (FTC) that the company engaged in deceptive business practices. These practices allegedly misled customers and inflated grocery shopping costs.
The FTC complaint accused Instacart of falsely advertising “free delivery” for first-time customers. However, these customers were still required to pay mandatory service fees that could add an additional 15% to their orders. The FTC also claimed that the company’s “100% satisfaction guarantee” was misleading. Customers who experienced late deliveries or incomplete orders typically received only small credits towards future purchases, rather than full refunds.
Furthermore, the FTC found that Instacart failed to clearly disclose the terms of its Instacart+ subscription service. Consumers signing up for free trials were automatically enrolled in paid memberships at the trial’s end. Allegedly, hundreds of thousands of consumers were charged membership fees without receiving benefits or obtaining refunds.
“Instacart misled consumers by advertising free delivery services—and then charging consumers to have groceries delivered,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “Under the settlement, Instacart must cease deceptive practices, clearly disclose subscription terms, and obtain express informed consent for automatic enrollments.”
Despite denying any wrongdoing, Instacart stated that the settlement allows the company to “move forward and remain focused” on delivering value to its customers. The company also faces a separate FTC investigation into its AI-powered pricing tool. This follows reports that customers were charged different prices for identical products.
Source: FTC Press Release