Instacart orders $60 million refund to customers
The FTC alleges that Instacart offered free grocery delivery, then tricked customers into signing up without their informed consent and charged them a fee.
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Instacart has agreed to pay consumers $60 million to settle a Federal Trade Commission lawsuit that alleges the company engaged in deceptive tactics.
The agency’s lawsuit alleges that Instacart deceived consumers through false advertising, failure to issue refunds, and illegal subscription registration procedures.
The FTC said in a statement Thursday, Dec. 18, that this practice harmed shoppers and increased the price of groceries for Americans.
Specifically, the agency argues that Instacart’s “free shipping” claims are false because consumers must pay a service fee to access the delivery service. Such fees can add up to 15% to the cost of an order and were not clearly disclosed to consumers, the agency said.
Instacart’s refund policy is under criticism
The company also allegedly had a 100% satisfaction guarantee policy, which implied full refunds to customers who experienced late deliveries or unprofessional conduct. However, in most cases, customers were offered a small credit toward a future order rather than a full refund.
The company allegedly hid the refund option in the app’s “self-service” menu, so customers believed they couldn’t request a refund. Additionally, the agency claimed that Instacart does not disclose the terms of Instacart+ membership.
The company’s free trial registration process did not adequately disclose that consumers would be charged membership fees at the end of the trial. The agency alleges that Instacart charged paid membership fees without consumers’ consent, resulting in hundreds of thousands of consumers paying the fees without receiving membership benefits or refunds.
Instacart settles lawsuit, customers will receive refunds
As part of the settlement, Instacart will pay refunds to customers if they were charged for Instacart+ without their consent. However, it is not clear at this time how customers will be able to access their refunds. In addition, Instacart will be asked to cease operations due to alleged fraud, according to the news release.
“Instacart misled consumers by advertising its free delivery service and then charging consumers for grocery deliveries, and failed to disclose to consumers who signed up for the free trial that they would be automatically enrolled in the subscription program,” said Christopher Mufarridge, director of the FTC’s Bureau of Consumer Protection.
“The FTC is focused on monitoring online shipping services to ensure that competitors compete transparently on price and delivery terms.”
In a statement emailed to USA TODAY, Instacart said it denies the allegations against it.
“We offer easy-to-understand marketing, transparent pricing and fees, clear terms, easy cancellation, and a generous refund policy, all in full compliance with the law and exceeding industry standards…
“This settlement allows us to move forward and remain focused on delivering value to our customers, shoppers, retailers and brand partners in the communities we serve.”
Michelle Del Rey is a trending news reporter for USA TODAY. Please contact mdelrey@usatoday.com.
