Instacart agrees to $60M consumer refunds after FTC accuses company of hidden fees and forced subscriptions
Grocery delivery giant Instacart will pay $60 million in consumer refunds under a settlement with the Federal Trade Commission (FTC) after the agency accused the company of misleading shoppers and driving up grocery costs for Americans.
The FTC alleged Thursday that Instacart falsely advertised free delivery on first orders, implied full refunds that were not provided and enrolled consumers in paid subscriptions without clear consent, claims the company disputes.
"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 a statement.
OLDER AMERICANS LOST UP TO $81.5B IN THE PAST YEAR TO FINANCIAL FRAUD, FTC REPORT SAYS
Regulators allege Instacart promoted "free delivery" while charging mandatory service fees — sometimes as high as 15% of an order — without clearly disclosing the costs.
The FTC also accused the company of misleading shoppers with a "100% satisfaction guarantee," while offering small credits instead of full refunds and burying refund options within its platform.
Additionally, the agency said Instacart failed to clearly disclose key terms of its Instacart+ subscription program, including automatic charges at the end of free trials. As a result, hundreds of thousands of consumers were allegedly billed for memberships without receiving benefits or refunds.
However, Instacart is denying the allegations.
"We flatly deny any allegations of wrongdoing by the Federal Trade Commission, and we stand firmly behind the integrity and transparency of our programs," an Instacart spokesperson told FOX Business. "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."
The Instacart spokesperson added that the company is "proud to offer a transparent, affordable and consumer-friendly service."
INSTACART’S AI PRICING EXPERIMENT DRIVES UP COSTS FOR SOME SHOPPERS, STUDY SAYS
"We provide straightforward marketing, transparent pricing and fees, clear terms, easy cancellation and generous refund policies, all in full compliance with the law and exceeding industry norms," the spokesperson said.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Under the proposed settlement, Instacart is barred from misleading consumers about delivery costs or satisfaction guarantees and must obtain explicit consent before charging customers for automatically renewing services, according to the FTC.
FOX Business' Daniella Genovese contributed to this report.