On December 18, 2025, the Federal Trade Commission (FTC) announced that it had reached a $60 million settlement with grocery delivery provider Instacart for allegedly deceptive advertising and subscription practices. The FTC approved the settlement, which was filed in the Northern District of California with the FTC’s complaint, in a 2–0 vote. According to media reports, Instacart may also be facing yet another FTC investigation into the use of an artificial intelligence (AI) pricing tool to engage in individualized algorithmic pricing.
What Was the Alleged Conduct?
The FTC’s allegations against Instacart fall into three categories: false “free delivery” advertisements, false “100% satisfaction guarantee” advertisements, and failing to properly disclose subscription terms. The FTC alleged that this conduct constituted deceptive acts or practices in violation of Section 5 of the FTC Act and a violation of the negative option provisions of the Restore Online Shoppers’ Confidence Act (ROSCA).
Free delivery allegations
The FTC alleged that Instacart falsely advertised free delivery on a customer’s first three orders. In particular, the FTC claimed that although Instacart did waive the “delivery fee” for relevant orders, it continued to charge new customers a mandatory “service fee” that was directly related to Instacart’s delivery services (and which was not charged for pickup orders). Consumers only learned of this service fee at checkout, after spending time setting up an account and selecting items for purchase. The FTC cited to Instacart internal research reports that noted that customers felt the advertisement was a “bait and switch” and that consumers did not differentiate between the delivery fee and the service fee.
Satisfaction guarantee allegations
The FTC alleged that although Instacart advertised to consumers that orders on the platform are backed by a “100% satisfaction guarantee,” the company failed to honor this claim with refunds when customers were dissatisfied. According to the FTC, in reality, customers who had issues with their order were offered credits toward future orders that were less than the full amount paid. Instacart did not adequately disclose that under the company’s written terms, its satisfaction guarantee only applied to fees charged by Instacart, rather than the total charge, and it had sole discretion to decide whether to issue a refund or a credit, as well as the size of the refund or credit.
The FTC also alleged that Instacart deceived customers by hiding the refund request option from its customer self-service tool. In particular, the FTC alleged that in 2022 Instacart conducted an experiment (which the company internally called “hide_refund”) to determine if it could coax more customers into receiving credits instead of refunds by removing the refund option from the self-service menu options and only providing refunds if specifically requested through a customer service chat or call. The FTC alleges that despite knowing this change deceived customers into believing refunds were not available, the company deemed the experiment a success because it saved Instacart approximately $289,000 per week. The change was permanently adopted.
Subscription disclosure allegations
The FTC alleged that Instacart enrolled many consumers into its subscription membership program through a free trial process that did not adequately disclose that they would be charged, and the amount they would be charged, for the subscription following the trial period. In particular, the FTC alleges that details about subscription term length, payment amount, and cancellation terms were hidden in fine print that Instacart did not require consumers to read, and which consumers may not have seen without scrolling down past the enrollment button, or click on a hyperlink.
The FTC further alleged that because of this deceptive conduct, many customers were charged for Instacart’s subscription services without giving informed consent, which violates ROSCA.
What Is the Punishment for Instacart’s Alleged Conduct?
The company agreed to pay a monetary judgment of $60 million.
The company also agreed to:
- Stop misrepresenting the cost of delivery or free delivery offers.
- Clearly and conspicuously disclose limitations and conditions for satisfaction guarantee claims.
- Stop misrepresenting when refunds are available.
- Accurately disclose all material terms of the company’s subscription products before obtaining billing information.
Is There Still an Active FTC Investigation into Instacart?
Although Instacart has reached an agreement with the FTC to resolve the current allegations, a recent report by Reuters suggests that the company is still under an active FTC investigation into its use of an AI pricing tool. The report indicates that the FTC is seeking information about Instacart’s use of the Eversight pricing tool, which the company acquired in 2022. This pricing tool allows retailers on the Instacart platform to use AI to charge different prices to different customers, a practice that has sparked public criticism following recent investigative reports by the New York Times and Groundwork Collaborative.
These practices are also the subject of an FTC 6(b) study into what it calls “surveillance pricing,” which was launched during the previous administration and may still be underway. Surveillance pricing occurs when companies use individualized information about customers to charge different prices to different customer groups, usually based on location, demographic information, purchase history, or browsing behavior. A preliminary report on the FTC’s findings was published in January 2025.
Reuters published a statement by the FTC that reads, “The Federal Trade Commission has a longstanding policy of not commenting on any potential or ongoing investigations. But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices.” Whether Instacart’s pricing practices lead to further FTC action will be an area to look closely at in the months ahead.
What Should Companies Be Looking Out For?
This Instacart settlement provides companies with a warning from the FTC of advertising practices that should be closely reviewed for compliance with the FTC Act and ROSCA.
Companies that advertise any free products or services should make sure that these offers are accurately represented and that there are no hidden or additional fees that could make the advertisement misleading.
Companies should review any satisfaction guarantee claims to consumers to ensure that any limitations are clearly and conspicuously disclosed and that consumers are not being misled about the nature of available refunds or credits. Companies should also be careful not to hide the availability of refunds from consumers.
Companies that use free trials for subscription offerings should review their disclosures to ensure that all material terms such as pricing, subscription length, and cancellation options are adequately disclosed before a customer is enrolled in the trial period.
Lastly, companies that are experimenting with surveillance or other AI-powered pricing strategies should be aware that the FTC is likely investigating these practices, and future enforcement action in that area may not be far away.
If you have any questions, or would like additional information, please contact one of the attorneys on our Consumer Protection/FTC team.
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