Instacart to Pay $60 Million to Settle FTC Lawsuit

<p>The Federal Trade Commission announced that grocery delivery provider Instacart will pay &dollar;60 million in refunds to consumers to settle allegations that the company engaged in numerous unlawful tactics that harmed shoppers and raised the cost of grocery shopping for Americans&period; Instacart will be required to cease its deceptive practices under a proposed FTC order&comma; and consumers who were charged for Instacart&plus; without their express informed consent will receive refunds as a result of the settlement&period;<&sol;p>&NewLine;<p>&OpenCurlyDoubleQuote;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&comma;” said Christopher Mufarrige&comma; Director of the FTC’s Bureau of Consumer Protection&period; &OpenCurlyDoubleQuote;The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms&period;”<&sol;p>&NewLine;<p>The <a href&equals;"https&colon;&sol;&sol;www&period;ftc&period;gov&sol;system&sol;files&sol;ftc&lowbar;gov&sol;pdf&sol;Instacart-Complaint&period;pdf">FTC has alleged<&sol;a> that Instacart engaged in a variety of deceptive tactics that misled consumers and caused them to pay more in fees&comma; while depriving consumers of refunds&period; Specifically&comma; the FTC alleges that Instacart&colon;<&sol;p>&NewLine;<ul>&NewLine;<li><strong>Falsely advertised &OpenCurlyDoubleQuote;free delivery” to consumers on their first order<&sol;strong>&NewLine;<ul>&NewLine;<li>Instacart’s claims of &OpenCurlyDoubleQuote;free delivery” are false because consumers still must pay a mandatory &OpenCurlyDoubleQuote;service fee” to get their groceries delivered&period;<&sol;li>&NewLine;<li>These mandatory service fees add as much as 15&percnt; to the order cost and were not clearly disclosed to consumers&period;<&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;<li><strong>Falsely advertised a &OpenCurlyDoubleQuote;100&percnt; satisfaction guarantee&comma;” implying that it will provide full refunds when consumers are not fully satisfied<&sol;strong>&NewLine;<ul>&NewLine;<li>Consumers who experience late deliveries or unprofessional service typically are not offered full refunds and instead are given only a small credit that can be used toward a future order&period;<&sol;li>&NewLine;<li>Instacart hid the refund option from the &OpenCurlyDoubleQuote;self-service” menu that consumers use to report problems with their orders&comma; leading many consumers to erroneously believe they could receive only a credit toward a future order rather than a refund&period;<&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;<li><strong>Failed to clearly disclose terms relating to Instacart&plus; membership enrollment<&sol;strong>&NewLine;<ul>&NewLine;<li>Instacart’s free-trial enrollment process for Instacart&plus; did not adequately disclose that consumers would be charged for memberships at the end of their trials&comma; nor did it disclose Instacart’s restrictive refund policy&period;<&sol;li>&NewLine;<li>As a result&comma; Instacart has charged many consumers for paid memberships without their express informed consent&period; Hundreds of thousands of consumers have been charged membership fees without receiving benefits from the membership or getting refunds&period;<&sol;li>&NewLine;<&sol;ul>&NewLine;<&sol;li>&NewLine;<&sol;ul>&NewLine;<p>Under the terms of the <a href&equals;"https&colon;&sol;&sol;www&period;ftc&period;gov&sol;system&sol;files&sol;ftc&lowbar;gov&sol;pdf&sol;Instacart-StipulatedOrder&period;pdf">FTC’s proposed settlement order<&sol;a><strong>&comma;<&sol;strong> Instacart will be prohibited from making misrepresentations concerning the costs of delivery services and satisfaction guarantees&period; Instacart must also clearly and conspicuously disclose the terms and obtain express informed consent for transactions involving subscription models where consumers are automatically charged unless they actively opt out&period;<&sol;p>&NewLine;<p>The Commission vote approving the stipulated final order was 2-0&period; The FTC filed the proposed order in the U&period;S&period; District Court for the Northern District of California&period;<&sol;p>&NewLine;