by Alexander Wissel, Executive Editor
Instacart is facing a two-front confrontation with U.S. regulators that underscores growing turbulence in the on-demand grocery economy: A $60 million settlement with the Federal Trade Commission (FTC) over alleged deceptive fee practices, and a separate FTC investigation into its pricing algorithms and AI-driven price variability.
While no-one likes the “15 minutes of fame” that comes with ‘regulatory moment’ there are plenty of recent historical tech showdowns that put Instacart in a rare class of companies.
In the early 2000s, Microsoft was in the spotlight for anti-competitive practices in the browser wars. The FTC later hit Facebook, now Meta, with a $5 billion fine for its privacy controls in 2019. The Department of Justice went after Google in 2020 for advertising monopolies, and Apple too in 2024 for a monopoly in its smartphone app ecosystem.
The outcome seems clear: Companies that push the edges of technology can run afoul of competition and ethical practices quickly. I’m sure there’s an analogy about needing to break some eggs if you want to cook here, but my editor won’t approve it.
Settlement Over Delivery and Membership Fees
In December 2025, Instacart agreed to a $60 million settlement with the FTC to resolve allegations that its advertising and billing practices misled consumers.
According to the FTC’s Instacart complaint, marketing claims such as “free delivery” masked mandatory service fees that could add up to roughly 15% of an order’s cost, undercutting transparency for shoppers. Mandatory service and other fees were not clearly disclosed, leading customers to pay more than they expected.
The FTC also took issue with how Instacart handled Instacart+ subscription enrollments. Free trial sign-ups allegedly lacked clear disclosure that customers would be automatically billed at the end of the trial, resulting in hundreds of thousands of consumers being charged membership fees without realizing that they had opted in.
Further, regulators found that the company’s “100 % satisfaction guarantee” often translated into small app credits rather than full refunds. Under the settlement, Instacart must cease misleading claims about pricing and guarantees and ensure clearer, affirmative consent for subscription charges.
Instacart denies wrongdoing, asserting in public statements that its pricing and marketing practices are transparent and compliant with industry norms. Unfortunately just as they’ve settled one case, they have new concerns.
Instacart Pricing Practices Under Separate FTC Scrutiny
Instacart is under investigation for its use of AI and algorithmic tools affecting how prices appear to consumers. Reports from independent researchers – including Consumer Reports and advocacy groups – found that identical grocery items could appear at different prices for different users simultaneously, with variations reportedly up to 23%.
The technology at the center of this scrutiny is linked to Instacart’s acquisition of an AI pricing platform, which was designed to help retailers test price changes in real time. Critics argue these experiments blur the line between market research and pricing practices that ultimately affect what households pay at checkout.
To say that the news was perceived badly by the public at writ large is a bit of an understatement. Instacart is still dealing with the fallout as it now adds the FTC back in their offices. Reacting to that backlash and regulatory engagement, Instacart has discontinued the controversial price-testing program altogether.
The FTC has issued civil investigative demands for documents and data tied to these pricing tools. While Instacart maintains that it does not directly set item prices – retail partners retain pricing control – the regulator’s interest highlights growing concern over how algorithmic pricing intersects with fairness and transparency in digital commerce.
The Edge of Grocery Technology Cuts Both Ways
Instacart’s settlement and ongoing pricing probe reveal two converging themes that Food Trade News has covered recently. Transparency now matters as much as convenience – regulators are signaling that opaque fee structures and ambiguous subscription tactics will draw scrutiny, especially when they affect essential goods like food.
Secondly, algorithmic pricing is now a regulatory flashpoint – dynamic or AI-assisted pricing strategies that produce inconsistent outcomes for consumers are drawing attention from consumer advocates and policymakers alike.
For Instacart, the twin pressures of enforced refunds and algorithmic questions may force operational changes that ripple across the broader on-demand economy, where delivery fees and personalized pricing are standard levers of profit and competition.
The leading edge of grocery technology; which Microsoft, Google, Meta and Apple have all discovered, can be incredibly profitable but fraught with challenges. The digital goldrush that is the LLM/AI grocery technology boom promises to cut grocers in for a share – but not without risk.
