Instacart to pay $60 million to settle FTC deceptive practices charges

The Federal Trade Commission confirmed that grocery delivery provider Instacart (NASDAQ: CART) will pay $60 million in consumer refunds to settle allegations of deceptive business practices that increased grocery shopping costs for Americans.

The FTC alleged that Instacart engaged in multiple misleading tactics, including falsely advertising "free delivery" while charging mandatory service fees of up to 15% of order costs. The company also allegedly misrepresented its "100% satisfaction guarantee" by offering only small credits instead of full refunds to dissatisfied customers.

"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," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection.

The FTC found that Instacart's free-trial enrollment process for its Instacart+ membership program failed to adequately disclose that consumers would be charged at the end of their trials. Hundreds of thousands of consumers were charged membership fees without receiving benefits or obtaining refunds, according to the agency.

Under the proposed settlement order, Instacart must cease making misrepresentations about delivery costs and satisfaction guarantees. The company must also clearly disclose terms and obtain express informed consent for subscription services where consumers are automatically charged unless they opt out.

Consumers who were charged for Instacart+ memberships without their express informed consent will receive refunds as part of the settlement. The Commission approved the stipulated final order by a 2-0 vote and filed it in the U.S. District Court for the Northern District of California.

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