Grocery delivery service Instacart will Paid $60 million In refunds to consumers to settle a lawsuit over illegal tactics, the Federal Trade Commission (FTC) got involved on Thursday.
The FTC lawsuit alleged that Instacart engaged in several deceptive tactics, including:
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Falsely advertising “free delivery” for customers’ first order when they actually need to pay a service fee of up to 15 percent
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Falsely advertising a “100 percent satisfaction guarantee,” implying a full refund that Instacart did not offer
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Failure to disclose Instacart+ membership enrollment terms, such as charging consumers a fee at the end of a free trial
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“Instacart misled consumers by advertising its free delivery services — then charging consumers for grocery delivery — and failing to disclose to consumers who signed up for a free trial that they would be automatically enrolled in its subscription program,” Director of the FTC’s Bureau of Consumer Protection, Christopher Movrage, stated in the FTC’s press release. “The FTC is focused on monitoring online delivery services to ensure that competitors compete transparently on prices and delivery terms.”
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Thursday, Instacart released Its press release regarding the FTC lawsuit. In it, the company states that although it has reached this settlement, “We completely deny any allegations of wrongdoing by the agency, and believe that the basis for the FTC’s investigation was fundamentally flawed. To avoid potential confusion, we want to make clear 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 the following:
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Clearly displays all fees before checkout, and explains what “$0 delivery” means.
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Instacart+ membership complies with regulatory standards and is one of the most “clear, straightforward, affordability-focused and consumer-friendly advertising subscription programs on the market.”
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It’s easy to try to cancel your Instacart+ membership
In addition to the $60 million settlement, Instacart agreed to stop practices alleged in the FTC lawsuit, including misrepresenting delivery costs. The company must also clearly define its subscription terms and obtain explicit approval of its subscription transactions.