FTC Investigation Targets Instacart Over AI Pricing Tool That Charged Shoppers Up to 23% More

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 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 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)