Instacart to Refund $60 Million to Consumers in FTC Settlement

Instacart, North America’s leading online grocery platform, has agreed to pay $60 million in consumer refunds as part of its lawsuit settlement with the Federal Trade Commission (FTC).

In its Dec. 18 announcement, the FTC said the lawsuit was based on allegations that Instacart engaged in consumer fraud consisting of misleading advertising and other deceptive practices that “harmed shoppers and raised the cost of grocery shopping for Americans.”

In addition to the settlement payments, Instacart will be required to stop all alleged deceptive practices under a proposed FTC order. Those consumers who were charged for Instacart without their express informed consent will also be receiving refunds.

“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 the announcement.

“The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms.”

According to the FTC, Instacart’s alleged deceptive practices cost consumers money and denied them any refunds. The agency charged Instacart with offering “free delivery” on a consumer’s first order, but then charging them a mandatory “service fee” to have the groceries delivered. The fees allegedly added up to 15 percent of the order, and costs were not properly disclosed to consumers.

The company was also found to have falsely advertised a “100 percent satisfaction guarantee,” which indicated full refunds would be offered if consumers were not happy with the service.

“Instacart hid the refund option from the self-service menu that consumers use to report problems with their orders, leading many consumers to erroneously believe they could receive only a credit toward a future order rather than a refund,” the FTC statement indicated.

The FTC also accused Instacart of failing to clearly disclose the terms of its membership program before charging consumers for memberships at the end of their trial period.

“Hundreds of thousands of consumers have been charged membership fees without receiving benefits from the membership or getting refunds,” the FTC statement said.

In a statement to The Epoch Times, an Instacart spokesperson said the company’s policies on marketing, pricing and fees, cancellation, and returns are straightforward and transparent, and that they are “all in full compliance with the law and exceeding industry norms.”

“We flatly deny any allegations of wrongdoing by the Federal Trade Commission, and we stand firmly behind the integrity and transparency of our programs,” the statement said.

“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.”

As part of the settlement, the FTC has ordered Instacart to cease making what it said are misrepresentations about the costs of delivery services and satisfaction guarantees. Agreement terms must also be clearly disclosed, and the company must obtain express informed consent for subscriptions.

Court documents dictate that the company must make payments within 14 days of the settlement order by electronic fund transfer.

The suit was filed in the U.S. District Court for the Northern District of California.

This article has been updated with a statement from Instacart.