Instacart to pay $60 million in refunds after feds allege it deceived customers
(CBS NEWS) – Sources from CBS say Instacart has agreed to refund $60 million to customers to settle allegations that the grocery shopping service engaged in deceptive marketing and billing practices, the Federal Trade Commission said Thursday.
The agency alleged in a lawsuit that Instacart charged hidden fees and refused to issue refunds, raising the cost of groceries for consumers and harming shoppers.
“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,” Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said in a statement.
The FTC said Instacart’s promise of free delivery to shoppers placing an order through the platform for the first time amounted to false advertising because the offer required that they pay a “service fee” to receive their groceries.
Instacart also failed to stand behind its “100% satisfaction guarantee” because it implied that it offered full refunds for dissatisfied customers, which the company failed to provide, regulators allege. Instead, customers whose orders were late or incomplete only received a small credit to use on a future order.
Instacart denied the FTC’s allegations, telling CBS News in a statement that the company provides “straightforward marketing, transparent pricing and fees, clear terms, easy cancellation, and generous refund policies — all in full compliance with the law and exceeding industry norms.”
Additionally, Instacart charged consumers for Instacart+ subscriptions, which offer perks like free or low-cost delivery, without their consent, the FTC said.
“We flatly deny any allegations of wrongdoing by the Federal Trade Commission, and we stand firmly behind the integrity and transparency of our programs. This settlement allows us to move forward and remain focused on delivering value for our customers, shoppers, and retail and brand partners in the communities we serve,” an Instacart spokesperson said in a statement.
Under the proposed settlement, the grocery service is banned from misrepresenting its delivery service costs and satisfaction guarantees. The company must also obtain consent from shoppers before they are enrolled in any Instacart subscriptions.
Separately, the FTC this week also expressed concern after an investigation by Consumer Reports and Groundwork Collaborative, a progressive advocacy group, said the company is testing technology that can result in different consumers paying significantly different prices for the same grocery items.
Instacart told CBS News that 10 of its retail partners are testing that approach to pricing, describing such practices as a standard way stores assess customer preferences.
