The Federal Trade Commission announced Tuesday that grocery delivery provider Instacart will pay $60 million in consumer refunds to settle allegations that the company engaged in deceptive business practices that harmed shoppers and increased grocery costs for Americans.
Under the proposed FTC order, Instacart must cease its deceptive practices and provide refunds to consumers who were charged for Instacart+ subscriptions without their express informed consent. The settlement addresses what regulators describe as a pattern of misleading tactics designed to extract additional fees from 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's investigation revealed multiple deceptive practices that allegedly cost consumers millions in hidden fees and unwanted charges. The agency's primary allegations center on Instacart's misleading advertising and subscription enrollment practices.
The most significant allegation involves Instacart's "free delivery" claims. According to the FTC, the company falsely advertised free delivery to consumers on their first orders while requiring customers to pay mandatory service fees to receive their groceries. These service fees added as much as 15% to order costs and were not clearly disclosed to consumers at the time of purchase.
The FTC also challenged Instacart's "100% satisfaction guarantee" marketing, which implied customers would receive full refunds when not fully satisfied with their service. In practice, consumers who experienced late deliveries or unprofessional service typically received only small credits toward future orders rather than full refunds. The company allegedly hid the refund option from its self-service menu, leading many customers to believe they could only receive credits rather than monetary refunds.
Additionally, the FTC found that Instacart's Instacart+ membership enrollment process failed to adequately disclose key terms. Consumers signing up for free trials were not clearly informed they would be automatically charged for paid memberships at the trial's end. The company also failed to properly disclose its restrictive refund policy for subscription services.
As a result of these practices, many consumers were charged for paid memberships without providing express informed consent, according to the FTC's complaint.
"The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms," Mufarrige said, signaling the agency's broader scrutiny of the rapidly growing online delivery sector.
The $60 million settlement represents one of the larger consumer protection actions against a major delivery platform. The refund program will specifically target consumers who were improperly charged for Instacart+ memberships without their clear consent.
Under the proposed order, Instacart must implement new disclosure requirements for its advertising and subscription practices. The company will be required to clearly communicate all mandatory fees associated with delivery services and provide transparent information about subscription auto-renewal terms.
The settlement comes as federal regulators have increased oversight of online platforms and subscription services. The FTC has pursued similar cases against other technology companies for allegedly deceptive subscription practices and hidden fees.
For consumers, the settlement means those who were automatically enrolled in Instacart+ without proper consent should receive refunds as part of the $60 million fund. The FTC will oversee the refund distribution process to ensure eligible consumers receive appropriate compensation.
The grocery delivery market has experienced explosive growth, particularly during the COVID-19 pandemic, as consumers increasingly relied on online services for essential shopping. This growth has also attracted increased regulatory attention as agencies examine whether companies are taking advantage of consumers through deceptive practices.
Instacart's agreement to the settlement does not constitute an admission of wrongdoing, following standard practice in FTC enforcement actions. However, the company must comply with all terms of the proposed order, which is subject to public comment before final approval.
The case highlights ongoing tensions between rapidly growing technology platforms and consumer protection regulators who are working to ensure traditional advertising and billing standards apply in digital marketplaces. As online delivery services continue to expand, the FTC's action against Instacart may serve as a template for addressing similar practices across the industry.
Consumers affected by Instacart's allegedly deceptive practices will receive notification about the refund process once the FTC finalizes the settlement terms and begins distribution of the $60 million fund.