Online grocery delivery giant Instacart has agreed to pay $60 million in refunds to settle allegations brought by the Federal Trade Commission (FTC) that it misled US consumers about its membership program and “free delivery” offers. The news of the settlement caused Instacart’s stock to fall 1.5% on Thursday, reflecting investor concern over regulatory scrutiny.

FTC Allegations Against Instacart

According to court filings in San Francisco, the FTC claimed that Instacart’s promotion of “free delivery” for first orders was misleading because shoppers were still charged additional fees.

The agency also alleged that Instacart failed to properly notify consumers that Instacart+ free trials would automatically convert to paid memberships, and that the platform misrepresented its refund policy.

Christopher Mufarrige, who leads the FTC’s consumer protection work, said:

“The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms.”

Instacart’s Response

Instacart has denied any wrongdoing but agreed to the settlement to avoid prolonged litigation and focus on its shoppers and retail partners. A company spokesperson emphasized:

“We provide straightforward marketing, transparent pricing and fees, clear terms, easy cancellation, and generous refund policies — all in full compliance with the law and exceeding industry norms.”

The company also stated that retailers set prices, and that its Eversight pricing tool conducts random tests, not based on individual user data.

Concerns Over AI Pricing and Consumer Impact

Recent nonprofit studies highlighted that Instacart shoppers could see different prices for the same items at the same stores. Critics argue that the company’s use of artificial intelligence (AI) in pricing experiments may have contributed to higher costs for consumers.

Lindsay Owens, executive director of the Groundwork Collaborative, commented:

“At a time when families are being squeezed by the highest grocery costs in a generation, Instacart chose to run AI experiments that are quietly driving prices higher. While the FTC’s investigation is welcome news, it must be followed with meaningful action to protect consumers.”

Wall Street Reaction and Industry Implications

The FTC settlement signals increased regulatory oversight of online delivery platforms, particularly regarding algorithmic pricing, subscription transparency, and consumer protections. Wall Street reacted to the news with Instacart’s stock closing down 1.5%, highlighting investor concerns over potential further scrutiny and compliance costs.

The case also underscores broader debates in the e-commerce and gig economy sectors about fairness, transparency, and the role of AI in dynamic pricing strategies.