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instacart will pay $60 million to settle Federal Trade Commission allegations that it misled users with false advertising and engaged in “unlawful subscription registration” practices.
Federal authorities alleged that Instacart used deceptive tactics in subscriptions and “satisfaction guaranteed” ads that forced consumers to pay high prices and prevented them from securing refunds.
For example, the FTC said that while Instacart falsely dangled promises of “free shipping” to consumers on their first order, shoppers still had to pay a mandatory service fee to get their groceries delivered.
The FTC also said Instacart falsely advertised that it would offer full refunds to users who had problems with their orders.
“Instacart misled consumers by advertising its free delivery service, charging consumers for grocery deliveries, and failing to disclose to consumers who signed up for the free trial that they would be automatically enrolled in the subscription program,” FTC Director of Consumer Protection Christopher Mufarige said in a statement.
Instacart acknowledged the FTC settlement in a blog post but denied “allegations of wrongdoing by the agency.”
The grocery delivery platform said it uses “plain marketing, transparent pricing and fees, clear terms, easy cancellation, and generous refund policies” that comply with the law.
“This settlement allows us to move forward and stay focused on what’s important to us: delivering value to our customers, shoppers, retailers and brand partners in the communities we serve,” an Instacart spokesperson said.
The move comes as Instacart reportedly faces another investigation by the FTC over its pricing practices.
The investigation comes after the company released extensive findings last week showing that its algorithmic pricing tools were causing shoppers to pay different prices for identical items in the same store.
Instacart stock fell about 7% in after-hours trading on Wednesday following the FTC’s investigation report. Shares fell more than 1% on Thursday.
The FTC has recently increased its scrutiny of companies that allegedly use fraudulent billing and registration schemes.
filed a lawsuit Uber In April, it alleged that the ride-hailing provider charged users for Uber One subscriptions without their consent. On Monday, 21 states joined the agency’s lawsuit as part of an amended complaint.
The agency filed suit in September. live nation Ticketmaster is suspected of using bait-and-switch pricing strategies and illegally collaborating with ticket brokers.
Earlier this month, the FTC announced that it sent more than $27.6 million to consumers who unknowingly enrolled and were charged fees for plans that shipped products marketed to promote weight loss, clearer skin, and other health care benefits.
