Instacart has agreed to pay out $60 million in subscriber refunds, the Federal Trade Commission announced on Thursday.
The refunds will help settle a lawsuit the FTC raised, accusing the grocery delivery app of engaging in “numerous unlawful tactics that harmed shoppers and raised the cost of grocery shopping for Americans.”
Under the settlement—which expires after 10 years—Instacart agreed to stop marketing its app with allegedly deceptive claims. That includes supposedly offering “free delivery,” when customers actually paid up to 15 percent in “service fees” not charged for pickup orders. Those service fees, the FTC alleged, were “just delivery fees by another name.”
Additionally, Instacart must cease claims that its services are “100 percent satisfaction guaranteed.” That claim implies that the company offers full refunds, but the FTC alleged that many customers were only offered “a small credit” for late deliveries or unprofessional services. Instacart also allegedly hid the refund option “from the ‘self-service’ menu that consumers use to report problems with their orders, leading many consumers to erroneously believe they can receive only a credit toward a future order rather than a refund,” the FTC alleged in its complaint.
Instacart “pocketed tens of millions of dollars by failing to honor its promise of 100 percent consumer satisfaction,” the FTC alleged.
Refunds won’t be offered to customers allegedly harmed by those claims, but subscribers who were never told upfront that they’d be automatically charged after free trials will soon be repaid. The settlement stipulated that Instacart would transfer funds to the FTC within 14 days of the court’s approval of the deal.