Grocery delivery service Instacart will pay $60 million in consumer refunds to settle a lawsuit over unlawful tactics, the Federal Trade Commission (FTC) shared on Thursday.
The FTC lawsuit claimed that Instacart engaged in several deceptive methods, including:
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Falsely advertising “free delivery” to customers’ first order when they actually needed to pay a service fee as much as 15 percent
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Falsely advertising a “100 percent satisfaction guarantee,” implying full refunds that Instacart didn’t offer
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Failing to disclose the terms of Instacart+ membership enrollment, such as that consumers would be charged at the end of their free trials
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“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,” director of the FTC’s Bureau of Consumer Protection, Christopher Mufarrige, stated in the FTC’s press release. “The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms.”
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On Thursday, Instacart released its own press release concerning the FTC lawsuit. In it, the company states that although it reached this settlement, “We flatly deny any allegations of wrongdoing by the agency, and we believe the foundation of the FTC’s inquiry was fundamentally flawed. And to avoid potential confusion, we want to clarify that, as of this settlement announcement, we are not aware of any other pending FTC investigations. We stand firmly behind the integrity, transparency, and value of our programs.”
Instacart shared that:
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It clearly displays all fees before checkout, and is clear on what “$0 delivery” means
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The Instacart+ membership complies with regulatory standards and is one of the most “clear, straightforward, affordability-focused, ad consumer-friendly subscription programs on the market”
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It’s easy to try and cancel the 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 subscription terms and obtain express consent for transactions of its subscriptions.
