Instacart Ends AI Pricing Tests After FTC Investigation and Public Backlash Over Price Discrepancies

Instacart scraps AI pricing tests that made some products more expensive

Instacart is ending its AI-powered pricing tests, which led some users to see higher prices on certain products than others. "Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices -- period," Instacart writes in a blog post on Monday. The change comes just weeks after a study from Groundwork Collaborative, Consumer Reports, and More Perfect Union found that Instacart offered multiple price points for the same grocery items at the same store. The report drew attention from lawmakers, including Sen. Chuck Schumer (D-NY), who said in a letter to the Federal Trade Commission that "consumers deserve to know when they are being placed into pricing tests." Reuters also reported that the FTC opened an investigation into Instacart's AI pricing tests. Instacart says it will no longer allow retailers to use the AI-powered Eversight technology it acquired in 2022 to run pricing tests, though retailers "may choose to vary the price of items on a store-by-store basis." It adds that the pricing tests "were never based on supply or demand, personal data, demographics, or individual shopping behavior." Last week, Instacart reached a $60 million settlement with the agency over separate allegations that it engaged in deceptive tactics, including falsely advertising free shipping. "We've listened carefully to feedback from our customers. And we understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers," Instacart says.

Instacart Ends AI Pricing Tests Showing Different Prices for the Same Items

Instacart has ended its AI-powered pricing tests following backlash after a study reported customers were shown different prices for the same items from the same store. "Effective immediately, Instacart is ending all item price tests on our platform. Retailers will no longer be able to use Eversight technology to run item price tests on Instacart," the company said in a blog post. The study, conducted by Consumer Reports, Groundwork Collaborative, and More Perfect Union, involved 437 volunteers in live tests across four cities. Those involved were instructed to add the same items to their cart, and around 74% of them saw varying prices. The average difference between the highest and lowest prices for an item was 13%. Over the course of a year, this could force an average American family of four to shell out an extra $1,200, the study found. Instacart said it was running these experiments in partnership with retailers to help understand how sensitive customers are to prices of certain items. It clarified that this wasn't dynamic pricing, but randomized A/B testing with retailers setting their own prices. The grocer also denied the study's claim about families needing to pay an extra $1,200 each year. Last week, Reuters reported that the Federal Trade Commission (FTC) had sent Instacart a civil investigative demand seeking more information about the AI pricing tool it was using for these tests, Eversight. The agency said it was "disturbed" by what it had read about it in the press. Members of Congress had also requested the FTC to look into the matter. In a Dec. 14 letter, Sen. Chuck Schumer (D-NY) said that "Consumers deserve to know when they are being placed into pricing tests," and urged the agency to "require a prominent on-screen label." On Dec. 17, Sen. Amy Klobuchar (D-MN) and seven others urged the FTC to investigate Instacart's tactics, citing concerns around higher food prices amid less competition. "Grocery prices are already too high -- Americans shouldn't be forced to pay even more because companies use artificial intelligence to inflate prices," Sen. Klobuchar said in a statement to PCMag. "Customers deserve fair prices and real competition to lower costs." Following backlash, Instacart has decided to end the AI pricing experiments and display the same prices for everyone. "Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices -- period," the company said. It's been a rough couple of weeks for Instacart. The company recently settled an FTC lawsuit that claimed it misled customers about delivery fees and agreed to refund $60 million to affected users.

Big Take: Instacart Ends Its AI-Pricing Experiment

Big Take: Instacart Ends Its AI-Pricing Experiment This month, the think-tank the Groundwork Collaborative, Consumer Reports and the news nonprofit More Perfect Union released a report finding that Instacart had been using an AI tool to run algorithmic price experiments on shoppers around the country. As a result, shoppers were being charged different prices for the exact same items from the exact same stores. At a time when inflation has driven grocery costs higher, the revelation that Instacart was charging some consumers more for the same goods struck a chord. On today's Big Take podcast, host Sarah Holder speaks with Bloomberg's antitrust reporter Leah Nylen and Groundwork Collaborative executive director Lindsay Owens about the report's findings and impact -- and Instacart's decision to end their experiment.

The FTC is reportedly investigating Instacart over its AI pricing tool

The Federal Trade Commission has sent Instacart a civil investigative demand, seeking information about its AI-powered pricing tool, according to Reuters. This comes after a recently published pricing experiment study showed that the online grocery delivery app gave different users different prices for the same items from the same store location at the exact same time. Some of the testers saw prices up to 23 percent higher than what the other testers saw, though the average difference for the same list of items was around 7 percent. Those higher prices could cost customers over $1,000 more in expenses for the year. "The Federal Trade Commission has a longstanding policy of not commenting on any potential or ongoing investigations," the FTC told Reuters in a statement. "But, like so many Americans, we are disturbed by what we have read in the press about Instacart's alleged pricing practices." When the study came out, Instacart told Engadget that the pricing variances were caused by some of its retail partners doing "limited, short-term and randomized tests" to better understand consumers. Those randomized pricing tests were enabled by Instacart's AI pricing tool called Eversight developed by a company it purchased in 2022. Instacart told CNBC that "much of what's been reported has mischaracterized how pricing works" on its platform. The spokesperson repeated that retailers conduct pricing tests on its app and said that "prices on Instacart do not change in real time," aren't based on supply or demand and that it never uses "personal, demographic, or user-level behavioral data to set item prices."

Instacart shares plunge 11% on report that FTC is probing company over AI pricing tool

Shares of grocery delivery service Instacart dropped as much as 11% in extended trading on Wednesday, following a report that said the U.S. Federal Trade Commission has begun an investigation into the company's pricing practices. The FTC sent a civil investigative demand to Instacart, Reuters reported, citing unnamed people. A study released last week showed that prices for the same products in the same supermarkets that work with Instacart can vary by around 7%, which can result in over $1,000 in extra annual costs. Instacart responded that retailers determine prices listed in the app. In 2022 Instacart spent $59 million to acquire Eversight, a company specializing in artificial intelligence-driven pricing and promotions for retailers and consumer packaged goods. Instacart sought to "create compelling savings opportunities for customers in real-time" with Eversight, according to a regulatory filing. The FTC and Instacart did not immediately respond to requests for comment.

Instacart says it doesn't manipulate prices using AI, but the FTC isn't convinced

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. The big picture: Since its debut in 2012, Instacart has faced several controversies related to the pay structure of its workers, tipping policies, and working conditions. The company is now the subject of an FTC probe into alleged price manipulation tied to its AI-powered dynamic pricing tool. According to sources cited by Reuters, the FTC has sent Instacart owner Maplebear a civil investigative demand related to its AI-driven pricing tool, Eversight. The probe was reportedly initiated following a Consumer Reports study that found the grocery delivery platform showed different prices to different shoppers for the same products. The report states that the displayed prices varied significantly based on customer profile, with some shoppers charged up to 23 percent higher than others. The average price difference for the exact same set of items at the same supermarket was typically around seven percent, with the inflated prices potentially costing customers over $1,000 extra in a year. The FTC told Reuters it was "disturbed" by reports of the alleged price gouging by Instacart, but did not officially confirm whether it opened an investigation into the matter. "The Federal Trade Commission has a longstanding policy of not commenting on any potential or ongoing investigations," the agency said. After Consumer Reports published its findings last week, Instacart issued a press statement admitting to the price variations. However, the company claimed that the pricing fluctuations were caused by some of its retail partners doing "limited, short-term and randomized tests" rather than the result of some platform-wide price manipulation by Instacart. An Instacart spokesperson subsequently told CNBC that the report mischaracterizes dynamic pricing on the platform, adding that its retail partners control the pricing, and Instacart only works with them "to align their online and in-store pricing," if possible. The spokesperson further claimed that prices on Instacart do not change in real time, aren't based on supply and demand, and that it "never uses personal, demographic, or user-level behavioral data" to set item prices. Instacart's denial isn't sitting well with irate users and politicians. New York Senator and former Senate majority leader Chuck Schumer told the FTC in a handwritten letter that "Consumers deserve to know when they are being placed into pricing tests," and that the agency should require websites to display a "prominent on-screen label" every time a user is roped into an A/B test. Earlier today, the FTC ordered Instacart to pay $60 million to customers to settle allegations of deceptive business practices. The agency found the company to have falsely advertised "free delivery" despite charging service fees, failing to provide refunds as part of its "100% satisfaction guarantee" promise, and auto-enrolling users into paid Instacart+ subscriptions without explicit consent.

Feds Probe Instacart's Al-Fueled Pricing Experiments on Groceries

A recent investigation that found Instacart is charging some customers nearly 25% more for the same products from the same store got a lot of people's attention, including the Federal Trade Commission. According to a report from Reuters, the agency has opened a probe into Instacart's pricing practices. The FTC didn't publicly confirm the probe due to its policy of not commenting on potential or ongoing investigations, but did tell Reuters, "Like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices." The publication reported that sources familiar with the matter said the agency sent a civil investigative demand to Instacart specifically seeking information on the company's Eversight pricing tool, a piece of software that Instacart describes as an “AI-powered pricing and promotions platform." The report that brought this scrutiny to Instacartâ€" a collaboration with policy group Groundwork Collaborative, Consumer Reports, and More Perfect Unionâ€"had volunteers work to simultaneously add items to their Instacart carts from the same stores at the same times. The experiment found that prices could vary on identical items by as much as 23% and found that customer carts were paying, on average, 7% more than other customers with the exact same items at checkout. Instacart claimed the different prices were experiments run in partnership with a small subset of retailers, and the prices that people paid were randomized and not assigned to them based on demographic data or personal information. Eversight, an AI company that Instacart acquired in 2022, became a central figure in the story. Shortly after acquiring the company, Instacart started using its software to "optimize†grocery prices and offer promotions. Per Groundwork Collaborative, Instacart has marketed the tool as a way to increase grocery store sales by 1% to 3% and a retailer's margins by 2% to 5%. On its website, Instacart marketed the tool for retailers to "Optimize your pricing with AI" and told retailers it could “continuously drive growth with dynamic pricing through experimentation." That language has since changed, but is still visible in archived versions of the page. That language was present until at least October of this year. Following the report, a spokesperson for Instacart told Gizmodo, “These tests are not dynamic pricing â€" prices never change in real-time, including in response to supply and demand. The tests are never based on personal or behavioral characteristics â€" they are completely randomized." Earlier this month, after the initial report was published, Instacart published a company update titled "Instacart’s Commitment to Affordability," in which the company said it has "focused heavily on encouraging more retailers to move toward in-store and online price parity, working closely with partners to remove markups and align online prices with in-store. And that work is paying off."

Instacart halts AI testing program that raised costs for some shoppers

After listening to customer feedback, Instacart said its AI price testing program "missed the mark for some customers." (Richard Drew/AP) Instacart is ending its AI price-testing program, which led to customers seeing different prices for the same item at the same store at the same time, the company wrote in a blog post Monday. The announcement comes about two weeks after groups Consumer Reports, Groundwork Collaborative and More Perfect Union published a report on the practice that found price discrepancies of as much as 23 percent for certain products. Consumer Reports and More Perfect Union are nonprofit media organizations, and Groundwork Collaborative is a left-leaning think tank. After listening to customer feedback, Instacart said it accepted the testing "missed the mark for some customers," according to the news release. "Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices -- period." The company said retailers will no longer have access to Eversight software, which ran the price experiment. Instacart acquired Eversight in 2022 and started rolling it out to retailers the following year. Phil Radford, president and chief executive of Consumer Reports, said he and his colleagues "welcome Instacart's decision to reverse course," and urged policymakers to pay attention and investigate "these types of AI-pricing experiments on consumers." The report led to widespread pushback from consumers. A TikTok video from More Perfect Union about the investigations has over 1.2 million views as of midday Monday. Members of Congress also spoke out, urging federal regulators to investigate. Last week, Reuters reported that the Federal Trade Commission had opened an inquiry into the company's pricing practices. Instacart shares fell about 6 percent the day after the report was released. It shed 2 percent Monday, to close at $45.02, but is up 8.7 percent year to date. As part of its research, the three groups enlisted 437 shoppers in four cities to conduct live tests. The groups simultaneously added the same products to their carts and recorded the prices. The report found that of the grocery items tested on Instacart, nearly three-quarters showed different prices, and some had as many as five different price points. Overall, researchers found that the average difference in Instacart basket prices was about 7 percent. While Instacart accepted the price discrepancies noted in the report, it said that some of the findings included "misconceptions and misinformation about what we do -- and don't do -- when it comes to prices." For example, it says in a blog post, Consumer Reports' claim that a typical family is spending $1,200 more on groceries as a result of these short-term, randomized pricing tests is "completely wrong." Instacart reached a separate settlement with the FTC last week to issue $60 million in customer refunds to resolve different allegations of regarding pricing tactics. The company "misled consumers by advertising free delivery services -- and then charging consumers to have groceries delivered -- and failing to disclose to consumers that signed up for a free trial that they would be automatically enrolled into its subscription program," said Christopher Mufarrige, director of the FTC's bureau of consumer protection.

Instacart is ending controversial price tests

Credit: Thomas Fuller/SOPA Images/LightRocket via Getty Images Grocery delivery service Instacart will end its controversial price tests, it announced on Monday. The move comes weeks after a Consumer Reports investigation claimed that Instacart's AI-enabled price experiments may be upping your grocery bill. The investigation reported that the experiments priced the same products differently for different consumers, sometimes by as much as 23 percent. The price variations could result in a yearly difference of $1,200 in grocery spending, according to Consumer Reports. The investigation also found that Instacart acquired an AI company in 2022 called Eversight, and afterwards, Instacart began offering pricing software to retail companies to "optimize" prices. Several lawmakers took action against individualized pricing this month. Democratic Sen. Ruben Gallego of Arizona introduced a bill to crack down on "surveillance" pricing, while Democratic Minnesota Rep. Angie Craig sent a letter to Instacart asking for answers. Democratic Senate Minority Leader Chuck Schumer of New York sent a different letter to the Federal Trade Commission (FTC). The latter two cite the Consumer Reports investigation. Last week, Instacart denied that the experiments were dynamic pricing or surveillance pricing, instead stating that they were random A/B tests. (Dynamic pricing fluctuates based on demand, and surveillance pricing uses a consumer's characteristics and behavior to set individual prices.) It also denied Consumer Reports' claim that these tests cost a typical family $1,200 a year. Today, Instacart announced that it is ending these price tests. "We understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers," the blog post states. "Effective immediately, Instacart is ending all item price tests on our platform. Retailers will no longer be able to use Eversight technology to run item price tests on Instacart." The post explains that this means if two families are shopping for the same items at the same time at the same store location on Instacart, they will see the same price. An Instacart spokesperson denied that these tests were dynamic or surveillance pricing in a statement sent to Mashable. "While these pricing tests were not dynamic pricing nor surveillance pricing, and were never based on personal, demographic, or user-level behavioral characteristics, we've listened carefully to customer feedback, and we understand these tests fell short of their expectations," the spokesperson said. This announcement also comes days after the FTC announced that Instacart will pay $60 million to consumers as part of a settlement. FTC's lawsuit claimed that Instacart engaged in deceptive tactics like falsely advertising "free delivery" and failing to disclose the terms of its Instacart+ membership. Instacart denied the FTC's allegations.

Instacart may have charged you more for the same groceries and it's just another case of AI hell

A new investigation by Consumer Reports, in collaboration with Groundwork Collaborative and More Perfect Union, suggests that Instacart's use of artificial intelligence in pricing experiments may have resulted in shoppers paying different amounts for the same groceries. The findings point to a system where prices can quietly vary between users, even when orders are placed at the same retailer, at the same time, and for identical products. The study tracked over 400 Instacart users across four major U.S. cities and found that the price tag on a carton of eggs or a bag of chips often depended on who was holding the phone. In the most extreme cases, the price difference for the same item hit 23 percent. This wasn't isolated to small shops; it happened at major chains like Costco, Kroger, Safeway, Sprouts, Albertsons, and Target. Recommended Videos AI pricing tests created hidden grocery price differences The scale of this is massive. During the tests, roughly 74 percent of the items reviewed displayed multiple price points simultaneously. When researchers added it all up, the total cost of a shopping cart varied by about 7 percent between users. Based on Instacart's own data on average spending, families getting hit with the "high" end of these experiments could end up paying an extra $1,200 a year. Instacart's Defense Instacart acknowledged the practice, confirming they run AI-assisted pricing tests with about ten retail partners. They defended the strategy as limited, short-term, and randomised - essentially digital A/B testing similar to how physical stores might test pricing. They also stressed that they don't use demographic or personal data to decide who pays what. Since the investigation went public, the company stated they have paused these tests at certain retailers, including Target and Costco. Shoppers, regulators question transparency and fairness Consumer advocates are calling foul. They argue that "surveillance pricing" - where algorithms quietly shift costs behind the scenes - undermines trust. When the price of essential food items fluctuates without transparency, it becomes nearly impossible for families to budget effectively, especially with grocery inflation already high. It feels less like a discount and more like manipulation. Regulators are starting to pay attention. The FTC is reportedly looking closely at AI pricing tools, and several states are considering laws that would force companies to disclose when a price is set by an automated system. For now, this is a wake-up call. Consumer Reports suggests cross-checking prices across different platforms or comparing them to in-store tags when you can. As AI becomes a standard part of retail, the pressure is on lawmakers to ensure that "dynamic pricing" doesn't just mean "unfair pricing."

Instacart to end AI price tests for retailers following investigation

Mary Cunningham is a reporter for CBS MoneyWatch. She previously worked at "60 Minutes," CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program. Instacart said Monday that it would halt the use of an AI-powered tool that allowed retailers to charge customers different prices for identical items on the grocery delivery platform. "Effective immediately, Instacart is ending all item price tests on our platform," an Instacart spokesperson told CBS News in an email statement. "Retailers will no longer be able to use Eversight technology to run item price tests on Instacart." The announcement comes after a recent investigation by Consumer Reports and Groundwork Collaborative, an nonprofit advocacy group, found evidence that retailers such as Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market and Target were testing the AI pricing system. The organizations based their findings on data gathered from more than 400 volunteers during online shopping sessions in September. During one test conducted for a Safeway in Seattle, the price for a box of Wheat Thins varied by as much as 23%. Retailers will continue to set their own prices on the delivery website, and they may still offer different prices at different brick-and-mortar locations, Instacart said Monday in a blog post. Instacart acquired Eversight, an AI-enabled pricing platform, in 2022, and began offering pricing software to retail companies in 2023. Instacart claims the AI pricing tests did not include customers' personal, demographic, or user-level behavioral characteristics. The decision to end the use of its pricing tool was made in response to feedback from Instacart customers, a company spokesperson said Monday. Reuters reported on Dec. 17 that the Federal Trade Commission was probing Instacart over its AI pricing tests. The FTC decined to comment on the report, but said in a statement that it was "disturbed by what we have read in the press about Instacart's alleged pricing practices." The FTC did not immediately respond to a request for comment on Instacart shelving its AI pricing technology. In a separate case last week, Instacart agreed to pay $60 million in customer refunds to settle federal allegations of deceptive practices after the FTC accused Instacart of falsely advertising free deliveries and not clearly disclosing service fees.

Instacart to halt 'item price tests' amid scrutiny of its AI tool for retailers

An Instacart delivery order pickup sign outside a grocery store in New York City in 2024. The company announced Monday it will no longer let retailers use its AI program to test prices. Yuki Iwamura / Bloomberg via Getty Images Instacart is ending its "item price tests" for retailers, the company announced Monday, following public criticism and reported questions from federal regulators about how prices on the shopping and delivery platform are set. "We understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers," Instacart said in a statement. "That's why, effective immediately, Instacart is ending all item price tests on our platform. Retailers will no longer be able to use Eversight technology to run item price tests on Instacart," the company said, referring to its Eversight artificial intelligence software. The controversy over pricing on Instacart arose earlier this month, when several nonprofit consumer advocate groups published a report Dec. 9 containing examples of prices that varied among customers who were shopping for the same item at the same store on Instacart. According to the report from Groundwork Collaborative, "Consumer Reports" and More Perfect Union, some customers were charged as much as 23% more than others who bought the same item in the same location at the same time. Overall, the groups found that the prices of items in Instacart baskets varied by an average of 7% across their sample size of 437 shoppers in four cities. Shortly after the test results were released, the Federal Trade Commission reportedly sent Instacart a civil investigative demand, seeking more information about Eversight. "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," the FTC said in a statement to Reuters on Dec. 17. The FTC did not immediately reply to a request for comment on the announcement Monday by Instacart. Instacart had previously told NBC News that much of what was in the report by the consumer advocacy groups mischaracterized how its pricing works. Retailers who sell products on the platform, such as supermarkets, control their own pricing strategies, not Instacart. And "wherever possible," Instacart said earlier this month, it worked with retailers to "align their online and in-store pricing." But just four days before Monday's public pivot, the FTC had announced that Instacart would pay $60 million to settle a different lawsuit filed by the commission. In that case, the FTC accused Instacart of having used "deceptive tactics to mislead consumers." These tactics allegedly included enrolling customers in automatic Instacart subscriptions without proper consent, advertising "free delivery" when the company was still charging a "service fee," and promoting a "100% satisfaction guarantee" while hiding the option to request a refund, leading customers to believe they could only get store credit if they were unsatisfied. Instacart did not admit or deny any of the allegations in the FTC's complaint. While it will no longer let retailers use the Eversight AI technology for price testing, the company said Monday that retailers will continue to set their own prices on the platform. This means prices could still vary for the same item. "We've listened carefully to customer feedback, and we understand these tests fell short of their expectations," Instacart said in Monday's statement. "At a time when families are working hard to stretch their grocery budgets, customers should never have to question the prices they see on Instacart."

Instacart shuts down dynamic AI pricing experiments following scrutiny of its tests - SiliconANGLE

Instacart shuts down dynamic AI pricing experiments following scrutiny of its tests Instacart operator Maplebear Inc. said today that it's going to cancel a controversial experiment that used artificial intelligence to show different prices for different products to some consumers. The company said in a blog post that retailers will no longer be given access to its Eversight technology, which allowed them to use AI algorithms to experiment with dynamic product prices. The decision came after the practice was scrutinized in a wide-ranging study and criticized by some U.S. lawmakers. Instacart paid $59 million to acquire Eversight in 2022. The software enables retailers to conduct pricing tests to assess how shoppers react to higher or lower prices on different items. At the time of the acquisition, the company said it would use the technology to help online retailers improve their sales and revenue growth and "surface the best deals for customers". "We understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers," the company admitted. "At a time when families are working exceptionally hard to stretch every grocery dollar, those tests raised concerns, leaving some people questioning the prices they see on Instacart. That's not okay - especially for a company built on trust, transparency, and affordability." The decision follows a study earlier this month published by Consumer Reports, which found that Instacart's algorithmic pricing tools were responsible for some shoppers paying more than others to purchase identical items from the same store. All told, the cost of the same basket of items varied by about 7%, the study found. That could result in some shoppers paying an additional $1,000 for the costs of goods per year. Instacart - an online grocery delivery service that allows customers to order groceries from local stores through a website or mobile app - initially responded to the study by saying retailers were responsible for the prices shown to consumers. In today's blog post, it doubled-down on this assertion, while rejecting claims that the technology enables "dynamic pricing" or "price surveillance". It added that the tests were never based on personal, demographic or individual user data. However, the practice has attracted a lot of unwelcome attention for the company. Last week, the Federal Trade Commission sent a civil investigative demand to Instacart about its pricing mechanisms. Instacart is no stranger to controversy. Last week, in a separate case, the company was ordered by the FTC to pay $60 million in refunds to customers over claims it had used deceptive tactics with its "satisfaction guarantee" and its advertising.

Instacart ends price tests on groceries after customer feedback

Some tests resulted in different prices for the same items, raising concerns. It's back to business as usual for Instacart. The grocery delivery service has announced it will end price testing, following customer concerns over a recent study that showed the company's AI technology allowed retailers to charge shoppers different prices for the same items. "Our customers have high expectations for Instacart. And for some, we fell short of those expectations," the company said in a statement on Monday. "We've listened carefully to feedback from our customers. And we understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers," it continued. "At a time when families are working exceptionally hard to stretch every grocery dollar, those tests raised concerns, leaving some people questioning the prices they see on Instacart. That's not okay -- especially for a company built on trust, transparency, and affordability." The company said it would be "ending all item price tests" on its platform, "effective immediately." "Retailers will no longer be able to use Eversight technology to run item price tests on Instacart," it said. Instacart acquired Eversight, which it describes as "an AI-powered pricing and promotions platform," in 2022. At the time, the company said the acquisition would allow retailers "access to new individualized and customized pricing tools and dynamic insights via Instacart that connect the dots between online and offline behavior to improve sales and growth." Instacart previously addressed how its pricing works following a case study from Groundwork Collaborative and Consumer Reports, published Dec. 9. The study examined data from nearly 200 grocery shoppers in four U.S. cities and found that some shoppers paid different prices for the exact same cart of food at the same time, with three quarters of all grocery items offered at varying prices. At the time, an Instacart spokesperson acknowledged to ABC News that pricing experiments were taking place, but stated that they were "limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable." In its statement Monday, Instacart reiterated that the tests "were not dynamic pricing or surveillance pricing" and were not based on "supply or demand, personal data, demographics, or individual shopping behavior." The company on Monday also detailed what Instacart shoppers can now expect since it dropped pricing experiments. "Retail partners will continue to set their own prices on Instacart, just as they always have. And just as retailers set different prices for items in their different brick-and-mortar store locations, retail partners may choose to vary the price of items on a store-by-store basis on Instacart, as well," the company stated. "But from now on, Instacart will not support any item price testing services." "Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices -- period," it added. The company said it will encourage "partners to remove markups where possible and better align their online prices with their in-store prices." Instacart also said it will clearly display retailer pricing policies on the digital storefront for customers to see "when a retailer chooses to apply markups."

Instacart Stock Drops Over 6% In Thursday Pre-Market: What's Going On? - Maplebear (NASDAQ:CART)

Shares of Instacart Inc. (NYSE:CART) declined 6.64% in pre-market trading on Thursday, after a report that the Federal Trade Commission (FTC) is launching a probe into its AI-based pricing tool. FTC Probes Instacart AI Pricing Tool The FTC has issued a civil investigative demand to Instacart, requesting information about its Eversight pricing tool, Reuters reported on Wednesday. The company did not immediately respond to Benzinga's request for comment. The tool helps retailers test pricing strategies to understand shopper responses, with grocers using the tool seeing 1-3% revenue growth, according to the company. The tool is driven by artificial intelligence and has raised concerns after a study revealed that different shoppers were being charged varying prices for the same items. A study by Groundwork Collaborative, Consumer Reports involving 437 shoppers across four cities found a significant disparity in prices for the same items at the same stores, with some shoppers paying up to 23% more than others for identical items. See Also: Bitcoin Adoption Slowing Due To 'Perceived' Quantum Risk? Popular Analyst Says What Matters Is If Investors Can Sniff The Peril Food Price Manipulation Crackdown This investigation into Instacart's pricing tool comes in the wake of a broader crackdown on alleged price manipulation in the U.S. food supply chain. Earlier in the month, President Donald Trump had ordered a probe into major meatpacking companies for alleged price manipulation, citing concerns about foreign ownership and market distortions affecting U.S. ranchers and consumers. This was followed by an executive order creating food-supply-chain security task forces within the Justice Department and the FTC to address risks from price fixing and other anti-competitive practices. Meanwhile, for the third quarter, Instacart posted a 10% rise in revenue and gross transaction value, beating estimates, as CEO Fidji Simo emphasised a focus on affordability and highlighted the company's enterprise platform as a key growth area. Benzinga's Edge Rankings place Instacart in the 49th percentile for momentum and the 57th percentile for value, reflecting its average performance in both areas. Check the detailed report here. Price Action: On a year-to-date basis, Instacart stock climbed 5.82% as per data from Benzinga Pro. On Thursday, it rose 0.18% to close at $45.65. READ NEXT: US Housing Market Enters Rare Reset As Affordability Improves Amid Rising Incomes, Stable Mortgage Rates Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. CARTMaplebear Inc$42.62-6.64%OverviewMarket News and Data brought to you by Benzinga APIs

Instacart stock falls on report of FTC probe over AI pricing tool (CART:NASDAQ)

Instacart (CART) shares fell nearly 7% premarket on Thursday after a Reuters report said the U.S. Federal Trade Commission (FTC) is probing the company's AI pricing tool. Citing two sources, the news outlet reported that the agency sent the company a The FTC probe has led to a nearly 7% drop in share price, indicating concerns about regulatory risks and reputational impacts. A study found that grocery basket prices varied by about 7% for the same items among different customers in multiple cities, raising concerns about fairness and transparency. Instacart claims it does not use personal or demographic data to set prices and that retail partners control base pricing; recent pricing experiments on the Target storefront have ended.

Instacart AI Pricing Tool Faces FTC Investigation | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. The Federal Trade Commission (FTC) has sent the grocery delivery platform a civil investigative demand seeking information about its Eversight tool, Reuters reported Wednesday (Dec. 17), citing sources familiar with the matter. According to the report, Eversight, a 2022 Instacart acquisition that lets retailers on the platforms experiment with different prices using AI, has been the subject of criticism following a recent Consumer Reports study. It found that different shoppers got different prices for the same products on Instacart. "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," the FTC said in a statement. The Reuters report adds that the launch of a probe does not prove wrongdoing and not all FTC investigations lead to lawsuits. The study in question was published by Consumer Reports last week in partnership with advocacy groups Groundwork Collaborative and More Perfect Union. It involved 437 shoppers in four cities, who saw vastly different prices on the same grocers from the same stores. There was, on average, a 7% difference in the total cost for the same grocery list at the same locations, the study found. "Some shoppers found grocery prices that were up to 23% higher than prices available to other shoppers for the exact same items, in the exact same store, at the exact same time," the study's authors wrote. PYMNTS has contacted Instacart for comment but has not yet gotten a reply. In a blog post last week, the company argued that the study had led to media reports that had "inaccurately blurred together fundamentally different things: A/B price tests, dynamic pricing, and surveillance pricing." The company said that the tests were not dynamic pricing and that it doesn't use personal, demographic, or user-level behavioral data to set prices. It also said that a claim in the study that these tests add $1,200 to a typical family's annual grocery bill is incorrect. "Our retailer partners control their pricing strategies on Instacart, and we work with them to align online and in-store pricing wherever possible," Instacart added. As the Reuters report noted, this is all happening at a time when the cost of living remains a key concern for most Americans. Research by PYMNTS Intelligence has found that 42% of consumers surveyed in October were living paycheck to paycheck out of necessity rather than choice, an 18% increase since August.

FTC probing Instacart's AI pricing tool after being caught charging...

The Federal Trade Commission is probing Instacart, two sources familiar with the matter told Reuters, as the retail platform faces criticism over its artificial intelligence-driven pricing tool. The agency has sent the company a civil investigative demand, the sources said. The FTC is seeking information about Instacart's Eversight pricing tool, one of the sources said. The software, which allows retailers on Instacart to experiment with different prices using AI, drew criticism after a recent study showed different shoppers got different prices for the same groceries on Instacart. "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," the FTC said in a statement.

Instacart shares slide on report of FTC investigation into AI pricing By Investing.com

Investing.com-- Instacart (NASDAQ:CART) shares tumbled in aftermarket trade on Wednesday after Reuters reported the online grocery firm was under investigation by the U.S. Federal Trade Commission over allegations of price discrimination using artificial intelligence. Instacart slid as much as 11% to $40.62 following the report. Reuters reported the FTC had sent a civil investigative demand to Instacart seeking information about the company's Eversight pricing tool, which allows retailers on the platform to experiment with different prices using AI. A months-long investigation by nonprofit organizations Consumer Reports and Groundwork Collaborative found price differences of as much as 23% for the same items between Instacart customers, largely due to algorithmic, AI-driven pricing used by the company. The study drew calls from U.S. lawmakers over an investigation into the firm. Senate Democrat Leader Chuck Schumer last week called on the FTC to investigate Instacart's pricing practices. High grocery prices have become a contentious topic this year, as American consumers grapple with rising living costs amid supply chain disruptions, bad weather, and the impact of the White House's trade tariffs. Instacart did not immediately respond to a mailed request for comment. The company describes itself as the "largest online grocery marketplace in North America," according to its website.

FTC probes Instacart's AI pricing tool, source says; shares drop

Dec 17 (Reuters) - The U.S. Federal Trade Commission is probing Instacart, two sources familiar with the matter told Reuters, as the retail platform faces criticism over its artificial intelligence-driven pricing tool. Instacart shares were down about 10% in after-hours trading. The agency has sent the company a civil investigative demand, the sources said. The FTC is seeking information about Instacart's Eversight pricing tool, one of the sources said. The software, which allows retailers on Instacart to experiment with different prices using AI, drew criticism after a recent study showed different shoppers got different prices for the same groceries on Instacart. "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," the FTC said in a statement. The opening of a probe does not prove wrongdoing and not all FTC investigations result in lawsuits. The FTC is taking on the issue of a company's use of technology to set prices at a time when the high cost of living in the U.S. has been a top daily concern for Americans. The issue of affordability helped Democrats win several state and local elections in November, becoming a major political headwind for President Donald Trump and his Republican party. SAME PRODUCT, DIFFERENT PRICE In a study involving 437 shoppers viewing Instacart prices in four cities saw wildly different prices for the same items sourced at the same stores. On average, there was a 7% difference in the total cost for the same grocery list at the same store, according to the study conducted by advocacy groups Groundwork Collaborative, Consumer Reports, and More Perfect Union. "Some shoppers found grocery prices that were up to 23% higher than prices available to other shoppers for the exact same items, in the exact same store, at the exact same time," the study's authors wrote. Instacart's Eversight allows retailers to run price tests to gauge shoppers' reactions to higher or lower prices across different categories of items. Grocers who use Eversight see revenue growth of 1-3%, according to Instacart's website. The pricing tests carried out through Eversight were randomized, unlike pricing practices based on fluctuating demand or a user's individual data and behaviors, Instacart said last week. "This year, we've focused heavily on encouraging more retailers to move toward in-store and online price parity, working closely with partners to remove markups and align online prices with in-store," the company said in a blog post last week. (Reporting by Jody Godoy in New York; editing by Chris Sanders and David Gregorio)