Instacart, the popular grocery delivery service, will refund $60 million to customers to resolve a Federal Trade Commission (FTC) lawsuit alleging misleading business practices. The FTC accused Instacart of falsely advertising free delivery, misrepresenting its satisfaction guarantee, and failing to clearly disclose subscription terms – practices that deceived consumers into unexpected fees and automatic renewals.
The FTC’s Core Claims
The lawsuit centers on three key deceptions:
- False “Free Delivery” Ads: Instacart advertised “free delivery” for first-time orders, but often charged a service fee of up to 15%, misleading customers about the actual cost.
- Misleading Satisfaction Guarantee: The company implied full refunds under its “100% satisfaction guarantee,” when, in reality, refunds were not always provided.
- Hidden Subscription Enrollment: Consumers who signed up for free Instacart+ trials were automatically enrolled in paid subscriptions without clear disclosure, resulting in unexpected charges.
Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, emphasized the agency’s focus on ensuring fair competition in the online delivery market. >”The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms.”
Instacart’s Response
While settling the case, Instacart vehemently denies wrongdoing, calling the FTC’s investigation “fundamentally flawed.” The company maintains that it clearly displays all fees upfront, complies with regulations, and offers an easy-to-cancel subscription program. Instacart asserts that it is unaware of any other pending FTC investigations at this time.
Settlement Terms and Future Compliance
In addition to the $60 million in refunds, Instacart must cease the deceptive practices outlined in the lawsuit. The company is now required to clearly disclose all delivery costs, subscription terms, and obtain explicit consent before automatically enrolling customers into paid subscriptions.
This settlement underscores a growing trend of regulatory scrutiny toward subscription services and online delivery platforms. The FTC’s action sends a clear message to businesses: transparency is crucial, and misleading consumers will face financial penalties. The case highlights the importance of reading fine print and understanding the terms of service before signing up for free trials or subscription programs.
