Instacart to pay $60 million to customers in FTC settlement

Grocery delivery service Instacart will pay $60 million in consumer refunds to settle a lawsuit over illegal tactics, the Federal Trade Commission (FTC) shared Thursday.

The FTC lawsuit claimed Instacart engaged in several deceptive practices, including:

• Falsely advertising “free delivery” on customers’ first orders when they are actually required to pay a service charge of up to 15 percent

• Falsely advertising a “100 percent satisfaction guarantee”, indicating full refunds which Instacart did not offer

• Failing to disclose the terms of Instacart+ membership enrollment, such as how consumers will be charged at the end of their free trial

“Instacart misled consumers by advertising free delivery services – and then charging consumers to deliver groceries – and failed to tell consumers who signed up for a free trial that they would automatically be enrolled in its membership program,” Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said in an FTC press release. “The FTC is focused on monitoring online delivery services to ensure that competitors are competing transparently on price and delivery terms.”

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On Thursday, Instacart issued its own press release regarding the FTC lawsuit. In it, the company says that although it has reached this settlement, “We deny any allegations of wrongdoing by the agency, and we believe the foundation of the FTC’s investigation was fundamentally flawed. And to avoid potential confusion, we want to clarify that, as of the announcement of this settlement, we are not aware of any other pending FTC investigations. We stand firmly behind the integrity, transparency, and value of our programs.”

Instacart shared this:

• It clearly displays all charges before checkout, and also explains what “$0 delivery” means

• Instacart+ membership meets regulatory standards and is one of the most “clear, straightforward, affordability-focused, advertising consumer-friendly membership programs” on the market.

• It’s easy to try and cancel Instacart+ membership

In addition to the $60 million settlement, Instacart agreed to stop the practices alleged in the FTC’s lawsuit, including misrepresenting delivery costs. The company must also clearly outline its membership terms and obtain explicit consent for its membership transactions.