Instacart to Pay $60 Million to Settle FTC Claims of Deceptive 'Free Delivery' Ads

Grocery delivery service Instacart will pay $60 million in consumer refunds to settle a Federal Trade Commission (FTC) lawsuit over what the agency called unlawful and deceptive tactics. The settlement, announced Thursday, targets marketing practices related to delivery fees and the company's subscription service.

According to the FTC's complaint, Instacart misled its customers in several ways. The agency alleged the company falsely advertised "free delivery" for first-time orders while still charging a service fee of up to 15%. The suit also claimed Instacart misrepresented its "100 percent satisfaction guarantee" by not offering full refunds and failed to properly disclose that its Instacart+ free trials would automatically convert into paid subscriptions.

"Instacart misled consumers by advertising free delivery services — and then charging consumers to have groceries delivered," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection, in a press release. He added that the FTC is focused on ensuring online delivery services "are transparently competing on price and delivery terms."

Instacart, while agreeing to the settlement, pushed back strongly against the allegations. In its own statement, the company said, "We flatly deny any allegations of wrongdoing by the agency, and we believe the foundation of the FTC's inquiry was fundamentally flawed." Instacart maintained that it clearly displays all fees before checkout and that its Instacart+ membership is a "consumer-friendly" program that complies with regulatory standards.

In addition to the $60 million payment for consumer refunds, the settlement requires Instacart to cease the alleged practices. The company must now clearly disclose its subscription terms and obtain express consent from customers before charging them for its Instacart+ membership.