Instacart caught using AI pricing to charge different prices for the same groceries across stores

Instacart Is Using AI to Show Different Prices for the Same Items

Instacart has been charging customers different prices for the same products, despite the items being picked up from the same store. While customers have at times suspected that something was amiss with Instacart prices, the inconsistent pricing was revealed in a study published this week by Groundwork Collaborative, Consumer Reports, and More Perfect Union. The study involved 437 volunteers in a live test across four cities. Participants were instructed to add specific items from a designated store to their cart, but stop before checking out. Results showed that almost 74% of the items added to the cart had varying prices. For example, shoppers who grabbed a dozen Lucerne eggs from a Safeway store in Washington, DC, were shown different prices: $3.99, $4.28, $4.59, $4.69, and $4.79. In another example, a basket of groceries from a Target store in Ohio showed prices ranging from $84.43 to $90.47. On the items chosen for the survey, the average price difference between the lowest and highest price was 13%. Applying a variation of 7% to the amount ($363) that Instacart says an American household of four spends per month on groceries, the cost swing would be around $1,200 per year, the study finds. In response, Instacart said that the products are part of a price-testing experiment it is conducting with retail partners. "Just as retailers have long tested prices in their physical stores to better understand consumer preferences, a subset of only 10 retail partners -- ones that already apply markups -- do the same online via Instacart," the company said. "These limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable." Target, however, denied any participation. "Target is not affiliated with Instacart and is not responsible for prices on the Instacart platform," the retailer tells The New York Post. Later, Instacart said that it had discontinued tests at Target. Instacart is using its AI-powered pricing tool, Eversight, to run these experiments. It insists they are "not dynamic pricing [since] prices never change in real-time, including in response to supply and demand." They also "never use personal, demographic, or user-level behavioral data" and "are not designed to increase the average markup set by a retail partner," Instacart says. "For any given shopper in any given store, prices only change on a few of the products they shop [for] and only by a small margin; it's negligible," it says on the Eversight page. However, with nearly half of Americans saying that grocery prices are a major source of financial stress at the moment, random price swings can make it hard to budget.

Instacart's algorithm is quietly charging people different prices for the same groceries

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. A months-long joint investigation by Consumer Reports and Groundwork Collaborative has uncovered widespread price testing on Instacart's grocery delivery platform. The research shows that identical grocery items sometimes cost different amounts for each customer. The disparity is sometimes as much as 23 percent. Investigators detected the tests at several of the nation's largest grocery chains, including Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market, and Target. The research methodology simulated hundreds of simultaneous online grocery sessions through controlled experiments with 437 volunteers across the US. Volunteers built identical shopping carts on Instacart for stores such as Safeway and Target and recorded their results. The experiments found that every participant encountered algorithmically determined pricing differences. Instacart has previously acknowledged conducting price testing, noting in corporate materials that shoppers are unaware they are participating. The company has described the price variations as "small and negligible." However, the Consumer Reports investigation found that the experiments were far more extensive and financially significant than the company's disclosures suggest. Instacart confirmed that it conducts dynamic pricing tests using artificial intelligence software with roughly 10 of its retail partners, though it declined to identify them. The company likens the practice to historical in-store pricing tests used to gauge customer reactions to different prices. There were no price variations for some products, including Premium brand saltine crackers, Heinz ketchup, and Barilla farfalle pasta. "These limited, short-term, and randomized tests help retail partners learn what matters most to consumers," Instacart said when asked for comment. The system operates much like dynamic pricing models used by airlines and hotels. It analyzes large datasets from its online marketplace, then adjusts prices within select product categories and user groups based on experimental parameters. Consumer Reports found price differences ranging from seven cents to $2.56 for single items in identical carts. In one Seattle-area test, identical baskets at Safeway varied by nearly $10, and customers were unaware of the discrepancies. Based on average grocery spending by US households, these variations could add roughly $1,200 per year in extra costs. The pricing tests are part of Instacart's strategic shift from logistics provider to technology platform. After acquiring the AI startup Eversight in 2022, Instacart began marketing pricing optimization tools that use machine learning to improve price perception and drive incremental sales. Investor materials reveal that the technology can boost sales by one to three percent and increase profit margins by up to five percent for grocery partners. Instacart's machine-learning tools include "smart rounding," which adjusts prices in fractional increments to test consumer sensitivity. The company inadvertently confirmed the practice in an email exchange with Costco, which surfaced during the investigation. Investor documents say smart rounding helps retailers set prices more precisely based on consumer responsiveness, generating millions in additional annual sales for large grocery partners. Other products showed moderate price variations, such as Cheerios cereal, Ruffles potato chips, and Lucerne eggs. The investigation also uncovered multiple instances of "fictitious" or "false reference" pricing, where Instacart presented different original prices for discounted items, altering the perceived size of the discount. For example, Seattle volunteers shopping at Safeway through Instacart saw Premium brand saltine crackers with original prices ranging from $5.93 to $6.69, before the app applied the identical sale price of $3.99. Pricing specialists note that fictitious pricing is an established retail tactic, now amplified by algorithmic systems that can test numerous pricing combinations simultaneously. Laura Smith, legal director at the nonprofit Truth in Advertising, told Consumer Reports that dynamic algorithms are accelerating false discounting, creating a sense of urgency and unfairly affecting competition in the marketplace. Instacart denies that its algorithms use personal or demographic data to set prices. The company says users are randomly assigned to price-testing cohorts by product category and region, not by identity. However, patent filings by Instacart and Eversight from 2017 to 2025 mention the potential use of behavioral and demographic data - such as age, household size, income, and purchase history - to refine offers and group customers into "subpopulations." Consumer advocates warn that these features represent the early stages of "surveillance pricing," a model in which companies use highly personalized data to set individual prices. For example, retailers like Kroger already leverage purchase history and demographic data to tailor loyalty-program discounts. And some items varied more dramatically in price. Federal and state regulators have begun to take notice. In 2022, the Federal Trade Commission issued guidance warning that companies engaging in price discrimination violate fairness standards if cost differences do not justify the practice. A subsequent FTC inquiry into individualized pricing software found that many retailers often rely on personal information to set targeted prices. That investigation is still ongoing. New York recently introduced the first law requiring disclosure labels for algorithmic pricing. "This price was set by an algorithm using your personal data," the mandated disclaimer reads. Proposed legislation in California, Colorado, and Pennsylvania goes further, aiming to ban surveillance pricing on essential goods such as groceries. Instacart is also advancing its in-store pricing ambitions. The company has developed electronic shelf labels, called "Carrot Tags," that sync with its pricing software, allowing retailers to update physical price tags instantly. Promotional materials previously suggested that the system could enable dynamic, real-time pricing at the shelf, though Instacart removed that language after press inquiries. The company says it does not currently use Carrot Tags for live price experiments in stores.

Instacart 'AI pricing' exposed with same exact products being sold at different prices -- here's the company's response

A huge report from Consumer Reports, Groundwork Collaborative and More Perfect Union has revealed that pricing experiments by Instacart could be inflating or reducing grocery prices for different users on the same items at the same stores. These prices could differ up to 23% at some of the largest grocers in the country, including Costco, Kroger, Safeway and Target. The collaborative report involved enrolling 437 shoppers across four cities where individual shoppers would add the same items to their carts in the Instacart app from the same store. According to their findings, nearly 75 percent of the grocery items were shown at multiple prices, with as many as five different prices for one product. On average, the difference between the highest and lowest price was 13%, while the largest differential for a single item was 23%. Instacart has disclosed that shoppers are not aware they're in an AI-based pricing experiment and claimed that price differences are "negligible." The company also told Consumer Reports that most customers will see "the standard price." However, the report shows this issn't the case at all -- and After the report debuted Instacart released a blog post that attempts to explain the tests, claiming the higher prices are supposed to help retailers align online prices with in-store prices. It goes on to say that the company is committed to affordability. "Just as retailers have long tested prices in their physical stores to better understand consumer preferences, a subset of only 10 retail partners -- ones that already apply markups -- do the same online via Instacart," the company stated. "These limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable." Apparently, the AI pricing was primarily being tested at Safeway and Target stores. A Target spokesperson told The New York Times that the retailer is "is not affiliated with Instacart and is not responsible for prices on the Instacart platform," and Instacart has reportedly stopped the experiment at Costco and Target. Retailers outside of Instacart are already using algorithms and technology to set prices. In 2024, the Federal Trade Commission issued a warning against eight companies that it accused of using personal data to set individualized prices on the same goods and services. "Firms that harvest Americans' personal data can put people's privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices," said former FTC Chair Lina M. Khan at the time. Consumer Reports notes that a number of states have started introducing bills or enacting laws to address algorithmic pricing. New York state just had a law go into effect in November, the Algorithmic Pricing Disclosure Act, which requires companies to have a disclaimer that reads, "THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA." Unfortunately, that's a rarity, and the next step in algorithmic pricing may already be taking place in your grocery stores between Instacart and efforts like its Carrot Tags program for retailers, which would create "instant and accurate pricing changes with dynamic price and promotion optimization strategies at the shelf." Instacart has reportedly taken steps to minimize this research (by deleting language and stopping the experiment in some stores) since the Consumer Reports article, but the work is likely continuing in the background.

Instacart Caught Using AI to Charge Wildly Different Prices for the Same Item

Does your online grocery order ever feel fishy, like the prices just aren't adding up? It turns out you're right to be suspicious -- and now we have compelling evidence. New research by a consortium of groups including Groundwork Collaborative, Consumer Reports, and More Perfect Union have found evidence of a massive experiment being run on consumers by grocery delivery company Instacart. The researchers' experiments found evidence that Instacart -- which calls itself "the largest online grocery marketplace in North America" -- has been charging some customers up to 23 percent more than others for the same product at the same location. To gather the info, the three groups compiled data from 437 Instacart shoppers browsing stores in several American cities. All together, the price for the exact same item fluctuated by an average of seven percent at the exact same location at the exact same time. At Safeway stores in Seattle, the same cart of groceries cost some shoppers as much as $123.93, while others paid $114.34 or $119.85. When looking into a Target in Minnesota, researchers found that Instacart split customers into seven distinct "price groups," varying from $81.24 at the lowest to $86.78 at the highest for the exact same groceries. While the cost only varied by a few dollars in the best-case scenarios, the algorithm-tax can add up fast. "A household of four will spend roughly an extra $1,200 per year for groceries on Instacart if they are exposed to the average fluctuations in total basket prices observed in this study," the researchers wrote. The whole thing kicked off in 2022, when Instacart acquired an AI company called Eversight. That acquisition, the researchers noted, allowed Instacart to begin "experimenting with prices," using dynamic algorithms to increase profits from each sale by two to five percent. In a 2024 call with investors and analysts, Instacart's CEO said that AI pricing algorithms are helping the company "really figure out which categories of products our costumers [are] more price sensitive on," and to set prices "based on that information." Alarmingly, the companies whose stores were involved in the scheme told the researchers they had no idea the tests were being run. Target, for example, said it has no relationship with Instacart, adding that it "does not directly share any pricing information with Instacart or dictate what Instacart prices appear on their platform." In its defense, Instacart told the consortium that it scrapes Target's prices and charges an additional amount to cover its "operating and technology costs." However, the company claims price fluctuations were just a test to see how much extra they need to charge, and that "tests have now ended." Though that particular research mostly covered online shoppers, companies like Walmart, Kroger, and Whole Foods have moved to implement dynamic pricing for in-store shoppers as well. Kroger, for example, has been experimenting with these systems since 2018, according to Forbes, and has since rolled it out to hundreds of brick and mortar locations. It all reinforces previous research which shows that the largest driver of inflation by far is corporate profits. With new dynamic pricing algorithms that can alter the cost of airline tickets, insurance coverage and now groceries, those profits are soaring to all new heights.

Instacart may be jacking up your grocery prices using AI, study shows -- a practice called 'smart rounding' | Fortune

The methodology: In September, Consumer Reports and the progressive think tank Groundwork Collaborative used ~200 volunteers to check prices on 20 items in four cities. The volunteers simultaneously chose the same product from the same store and found price differences in ~75% of items. Costco, Kroger, Safeway, and Target were among the retailers included. Shop of horrors: This type of dynamic pricing, which has proliferated in the age of AI, can contribute to steeper costs, according to an academic paper released this year. And Instacart is all in on AI: The company and OpenAI just announced a partnership that will allow customers to cook up recipes in ChatGPT and pay for groceries without leaving the chat interface. -- DL

Instacart takes dynamic grocery pricing to new levels

A new study from Consumer Reports and Groundwork Collaborative shows that the digital shopping platform Instacart is testing an algorithmic pricing model that could cost shoppers an extra $1,200 a year. Additionally, Instacart consumers reportedly weren't aware that prices were changing or that they varied by customer. The study asked shopping volunteers to review prices on 20 items at major grocers like Costco, Albertsons, Safeway, Target, and Kroger across four major U.S. cities. The result showed 75% of items changed price at an average upsell of 23% with Instacart. The app is dubbed "by far the dominant e-commerce grocery delivery platform in the U.S., with nearly 250 million orders fulfilled in the first three quarters of 2025." When analysts studied the results, they discovered five different prices for some products. For example, the same Oscar Mayer Deli Turkey: $3.99, $4.31, $4.59, $4.69, and $4.89, representing 23% between the lowest and highest product markup. Using the same testing model at a Washington, D.C. Safeway, researchers found a dozen Lucerne eggs listed at five different prices: $3.99, $4.28, $4.59, $4.69, and $4.79. Ultimately, study analysts found that Instacart basket totals varied by about 7% for the same items from the exact locations, at the same time. "Instacart is quietly running pricing experiments on millions of shoppers during the worst grocery affordability crisis in a generation, and it's costing households as much as $1200 a year," said Lindsey Owens, executive director at Groundwork Collaborative. "They have turned the simple act of buying groceries into a high-tech game of pricing roulette." When the same box of Wheat Thins can jump 23% in price because of an algorithm, "that's not innovation or convenience, it's unfair," Owens notes. "It's time for Instacart to close the lab. Americans shopping for groceries aren't guinea pigs and shouldn't have to pay an Instacart tax." For its part, Instacart said it's conducting experiments at 10 unknown grocery chains, with testing impacting a small number of shoppers. "Just as retailers have long tested prices in their physical stores to understand better consumer preferences, a subset of only 10 retail partners -- ones that already apply markups -- do the same online via Instacart," the company said in a statement. "These limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable." "Instacart's 'smart rounding' experiment is a high-stakes gamble with consumer trust. In an economy where inflation has made every dollar count, today's shopper is more value-focused than ever," said Mike Herrick, chief technology officer at Airship, a Tampa, Fla.-based mobile-first consumer experience services firm. Herrick noted Instacart isn't just comparing products; it's auditing the retailers themselves. "When up to a third of consumers are ready to switch brands over a single bad interaction or price discrepancy, treating pricing as an opaque 'black box' experiment is incredibly dangerous," he stated. Dynamic pricing, also known as 'smart rounding' pricing models, has become a controversial topic in both the retail and consumer advocacy realms, and now with Instacart's motives in question. "This looks less like optimization and more like experimentation," said Natalia Glushchenko, revenue growth management director at New York City-based Vibrant Ingredients. "When 75% of items change price with an average 23% upsell, shoppers don't see 'smart rounding', but they will see inconsistency, and that will lead to erosion of trust." Glushchenko noted AI-driven pricing can "absolutely improve" availability, reduce waste, and match demand patterns, but consumer and retailer risks abound. "The moment the customer feels they are being 'tested on, ' it becomes a brand-risk, not a value-add," she said. "That's especially so in grocery stores, where trust is the most important." "Instacart's use of smart rounding shows how AI-driven pricing is shifting power away from consumers," said Andrew Gamino-Cheong, chief technology officer and co-founder of AI governance company Trustible. "The biggest concern is that shoppers weren't told they were part of a live pricing test that could raise their grocery bills. This fits a broader trend in e-commerce where algorithms quietly test how far prices can be pushed before people notice or stop buying." Additionally, smart rounding testing could lead to more harmful consumer outcomes. "If pricing models use location or buying history to infer traits about shoppers, certain groups could be charged more without realizing it," Gamino-Cheong noted. "We've already seen similar patterns in housing, credit, and insurance, and groceries could be next." The big picture shows that while AI-powered pricing experiments may boost revenue, they weaken consumer trust at a time when affordability is already a significant concern. "Without safeguards, this type of pricing will likely become a larger political issue in the years ahead," Gamino-Cheong added.

Instacart's AI-enabled pricing may bump up your grocery costs by as much as 23%, study says

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 customers may be surprised to discover they are unwittingly paying more for the same items sold by some of America's major retail chains than their fellow shoppers. A months-long investigation by the nonprofit organizations Consumer Reports and Groundwork Collaborative found that identical grocery items on Instacart could differ in price by as much as 23% from one customer to the next. That's due to the platform's algorithmic pricing experiments, which place different price tags on identical products without revealing the discrepancies directly to shoppers, the report found. The AI model, which Instacart started implementing in 2022, sets grocery prices at some large retail chains that partner with the San Francisco-based delivery company, the groups added. Variations in pricing for identical products are particularly acute in online shopping, given that customers don't have the same reference points as in physical stores, said Neil Saunders, managing director and analyst at GlobalData. "You sit in front of your phone or your browser, you're shown the price, and you don't know what everyone else was shown," he said. Justin Brookman, director of digital marketplace policy for Consumer Reports, agreed. "Traditionally, we haven't had to worry about this sort of thing. We would go to the supermarket and pay what was on the shelf," he told CBS News. "Now, I think people are going to be worried: Am I getting ripped off?" Consumer Reports and Groundwork Collaborative based their findings on data gathered from online shopping sessions, in which hundreds of volunteers shopped on Instacart for identical baskets of goods from Safeway and Target. Of the 437 participants, every single one was exposed to algorithmic price experiments, according to the report. The investigation also found evidence of price experimentation at Albertsons, Costco, Kroger and Sprouts Farmers Market. According to Consumer Reports and Groundwork Collaborative, Instacart has framed price differences between customers as "negligible." However, the scope of the price experiments is "far broader and more costly to some consumers than has been publicly acknowledged," the organizations said in the report. The investigation found that some products had as many as five different price points, with variations ranging from as little as 7 cents to $2.56 per item. During one test conducted for a Safeway in Seattle, the price for a box of Wheat Thins differed by as much as 23%. All told, the price variations at that Safeway location could amount to an average annual cost swing of about $1,200, based on how much Instacart says the typical household of four spends on groceries, the report found. Some products were unscathed by the price experiments. For example, at the Seattle Safeway, volunteers did not observe any price variations for items such as Premium brand saltine crackers, Heinz ketchup and Barilla farfalle pasta. Safeway didn't immediately respond to a request for comment. Instacart told CBS News in a statement that 10 of its retailer partners are using pricing experiments, but did not specify which ones. "Just as retailers have long tested prices in their physical stores to better understand consumer preferences, a subset of only 10 retail partners -- ones that already apply markups -- do the same online via Instacart," a spokesperson said in an email. "These limited, short-term and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable." Customers were also shown different "original" prices, making some savings appear larger, the report found, a concept known as "fictitious pricing." Amazon was sued this October for allegedly using this tactic during its summer Prime Day sale. Dynamic pricing, which sets consumer prices based on demand, has long been part of the e-commerce landscape. However, while it's a common tactic in certain industries like travel, where supply is fixed, consumers may be surprised to see it cropping up in the grocery space, Saunders said. "In retail, especially grocery retail, people expect the price to be the price," he said. "They don't expect [it] to yo-yo up and down." Another issue, as the report points out, is that consumers often have no clue that they may be paying more for the same item. The Federal Trade Commission (FTC) Act prevents "unfair or deceptive acts or practices," including "misleading cost or price claims." However, Saunders said he doesn't believe companies are legally obligated to tell customers that they are part of pricing experiments. "Instacart shoppers we spoke to say they were unaware that they were participants in active Instacart pricing experiments and view the practice as manipulative and unfair," the report says. One example of dynamic pricing is surveillance pricing, a tactic employed by companies that involves using a shopper's behavior and personal data to make price evaluations, according to the FTC. Saunders said surveillance pricing has been supercharged by artificial intelligence, which can assess vast amounts of data at rapid speeds to determine price levels. Instacart told CBS News that it does not use personal, demographic or user-level behavioral data to set prices. As pricing models like Instacart's become more sophisticated, Brookman said he's concerned about what it could mean for consumers. "I'm worried companies are going to use these sorts of algorithmic pricing models to charge us the maximum amount we're willing to pay, which is good for their profits, but not so good for [our wallets]," he said.

Instacart responds to new report on grocery store price experiments

A survey found that Instacart has been experimenting with grocery pricing. New research has put a spotlight on how new technology has changed the way retailers may start setting grocery prices, with one study finding that some shoppers are paying different prices for the exact same cart of food at checkout. A small case study from Groundwork Collaborative and Consumer Reports looked at nearly 200 grocery shoppers in four U.S. cities that went on the app Instacart and shopped for the same products at the same time. At one store in Seattle for example, the survey found a box of crackers was $3.99 for some shoppers, while for others it was $4.89 -- a 23% difference. In Washington, D.C., a dozen eggs cost $3.99 for some shoppers but $4.79 for others. And in Ohio, peanut butter was $2.99 for some customers and $3.59 for others. Overall, three quarters of all grocery items were offered at varying prices, the survey data showed. Researchers told ABC News that Instacart has been using AI to run pricing experiments on millions of shoppers, testing how much stores can raise prices before customers remove an item from their cart or switch to another store. In a statement to ABC News Instacart acknowledged that these pricing tests are taking place. "These limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable," a spokesperson for the company stated. Instacart said prices are not adjusted in real time based on supply and demand or on customers' personal data, such as income or shopping history. The study found that price differences could ultimately cost a typical family of four an extra $1,200 per year in grocery spending. Researchers said consumers may soon see similar practices in stores as retailers adopt digital price tags that can change in real time. That means the price you see on the shelf could change by the time you reach the checkout.

Instacart charges shoppers different prices for same items, report says

Track grocery prices by city and item with USA TODAY's interactive shopping cart. Instacart is experimenting with pricing, charging some people shopping for groceries at the same time and same store location prices that can vary by as much as 23%, an investigation has found. On average, that could cost a family of four a swing of $1,200 based on Instacart's prices, the study by Consumer Reports, More Perfect Union, and Groundwork Collaborative, a Washington, DC-based think tank, found. That is particularly troubling as American shoppers say they are grappling with higher grocery prices, in part due to inflation and tariffs, said Lindsay Owens, executive director of Groundwork Collaborative. Instacart has "turned the simple act of buying groceries into a high-tech game of pricing roulette. When the same box of Wheat Thins can jump 23% in price because of an algorithm, that's not innovation or convenience, it's unfair," Owens said in a press release. "Americans shopping for groceries aren't guinea pigs and shouldn't have to pay an Instacart tax." Investigation found 74% of grocery prices were different Groundwork Collaborative, Consumer Reports and More Perfect Union conducted an independent experiment involving 437 shoppers in live tests in four cities earlier this year. Volunteer shoppers simultaneously added 20 grocery items from a specific grocery store to their Instacart shopping carts and researchers analyzed the prices. The tests were done at Safeway and Target locations in North Canton, Ohio; Seattle, Washington; Saint Paul, Minnesota and Washington, DC. A follow-up test also evaluated two products at other Albertsons, Costco, Kroger and Sprouts Farmer Market locations, which found similar price experimentation, but the results were not included in the study. Almost three quarters or 74% of the grocery items in the experiment had multiple prices for shoppers at the same store. For instance, a box of 10 Clif Chocolate Chip Energy bars sold for $19.43, $19.99 and $21.99 on Instacart at a Seattle Safeway store. The average difference between the lowest and highest price was 13%. But some shoppers found prices that were 23% higher than the other shoppers at the same store for the same product. Overall, researchers found Instacart basket totals varied by an average of about 7% for the same cart at a location during the experiment. "If you and I were standing in the checkout line with the exact same box of cereal, and we were charged different amounts, we would think it's some kind of bad joke," Owens told USA TODAY. The consumer groups are calling on Instacart to stop the pricing experiments and on lawmakers to protect shoppers from "pricing schemes and 'surveillance' pricing." On Tuesday, Sen. Ruben Gallego (D-Arizona) introduced legislation to outlaw surveillance pricing. The "One Fair Price Act" would prevent companies from being able to use customers' personal data to set individualized prices. States including New York, Colorado, California, Georgia, Illinois and Pennsylvania have introduced or advanced legislation to curb individualized or algorithm-driven price manipulation, according to the consumer groups. Additionally, Rep. Greg Casar's (D-Texas) "Stop AI Price Gouging and Wage Fixing Act" would ban the use of personal data to set individualized prices. Instacart, retailers respond to investigation In a statement provided to USA TODAY, Instacart said retail partners control the prices on Instacart. A subset of 10 retail partners do test pricing, Instacart said. "These limited, short-term, and randomized tests help retail partners learn what matters most to consumers and how to keep essential items affordable." Instacart said personal, demographic and user-level behavioral data is not used to set online prices. "These tests are not dynamic pricing - prices never change in real-time, including in response to supply and demand. The tests are never based on personal or behavioral characteristics - they are completely randomized," an Instacart spokesperson said. Instacart also issued a blog post on Tuesday, Dec. 9, outlining its commitment to affordability. A Target spokesperson told USA TODAY that the retailer is "not affiliated with Instacart and is not responsible for prices on the Instacart platform." "Target does not vary our regular price for any particular guest or group of guests. Guests at a given location get the same regular price when shopping directly with Target," the spokesman said. In a response included in the report, Instacart said it used publicly available pricing for Target and that its pricing experiment with Target had ended. Albertson's, the parent company of Safeway, did not respond to a request for comment on the study from its authors or USA TODAY. Similarly, Costco and Kroger did not respond to either request. Sprouts declined comment to the study and did not return a comment to USA TODAY. Shoppers want one price The idea of dynamic or variable pricing in grocery will not be welcomed by consumers, said Neil Saunders, a retail analyst at the research and analytics firm GlobalData. "When buying food most people expect the price to be standardized and not to fluctuate depending on who is buying," Saunders told USA TODAY. "The issue is that as this is online, many shoppers may not even be aware of dynamic pricing." Ultimately, Saunders said, it is difficult for consumers to identify dynamic pricing other than by checking prices in store or monitoring them over time. Lynn Folk, 58, of Oregon, Ohio was one of the volunteer shoppers for the study, shopping via Instacart at a North Canton, Ohio Target location. Among the prices she saw in her Instacart cart during the experiment, were some that were both higher and lower than others shopping the same items at the same store. "It feels kind of dirty," Folk told USA TODAY of the pricing differences. "It shouldn't be that my neighbor is paying more or less." Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher and @blinfisher.bsky.social on Bluesky. Sign up for our free The Daily Money newsletter, which breaks down complex consumer and financial news. Subscribe here.

Instacart Was Charging Wildly Diverging Prices for Different Shoppers, an Investigation Found -- So I Checked My Costco Orders

My own receipts showed similar double-digit swings, and prices shifted down to the penny, with staples like eggs, butter and olive oil costing wildly different amounts from one order to the next, far beyond normal grocery inflation or what's seen in consumer apps tracking Costco prices over time. The U.S. government may have minted the last penny last month, but Instacart's algorithms are still fighting for every last cent. While shoppers have grown accustomed to prices ending in .99 -- a psychological trick as old as the cash register -- Instacart (CART) users like me see something different: $4.17 for eggs, $17.37 for Nature Valley bars, $11.43 for basil pesto. The company's pricing shifts seemingly every time you log in, with price changes down to the penny. A major investigation published this week suggests just how far Instacart's pricing precision has been taken. Consumer Reports and Groundwork Collaborative found that Instacart has been running AI-powered pricing experiments on millions of shoppers, charging customers different prices for identical items at the same stores, sometimes as much as 23% extra. I reviewed a year's worth of my own Costco Wholesale (COST) orders through Instacart and found the same pattern -- double-digit price swings on items I buy regularly, with no obvious explanation. (More on that below) CR and Groundwork Collaborative recruited 437 volunteers across four cities to shop on Instacart for identical items at the same stores simultaneously. Three-quarters of the products had different prices for each user. The average shopping basket varied by about 7% -- a difference that CR estimated could cost a family about $1,200 a year. The retailers affected included Costco, Kroger (KR), Target (TGT), Safeway, Albertsons (ACI) and Sprouts (SFM). The practice, known as surveillance pricing, appears to go back to Instacart's 2022 acquisition of Eversight, an AI pricing company. In the company's 2023 shareholder letter, Instacart described one of its tools, "smart rounding," as "a machine learning-driven tool that helps retailers improve price perception and drive incremental sales." With , algorithms set individualized prices based on your customer data, often without your knowledge. Unlike a price tag or a coupon, it's invisible -- two people can see different prices for the same item simultaneously and not know it. It's also tricky for outside analysts to prove it's being used, but the CR investigators caught a lucky break. Costco accidentally forwarded an internal Instacart email confirming that "smart rounding" experiments were underway between the companies. After its investigation was published, Instacart said it had stopped running pricing experiments at both Costco and Target. But Instacart has stopped short of saying it was using algorithms based on specific individuals. "These tests are not dynamic pricing -- prices never change in real-time, including in response to supply and demand," an Instacart spokesperson told Investopedia. "The tests are never based on personal or behavioral characteristics -- they are completely randomized." But a disclosure Instacart shows its New York customers tells a different story. Under the state's Algorithmic Pricing Disclosure Act, which took effect Nov. 10, the company must tell its users if it engages in the practice. As such, its app notifies New York users that "certain prices and/or fees may vary based on randomized tests," "we use personal information (such as delivery address) to calculate fees, and "this price was set by an algorithm using your personal data." My family orders from through Instacart almost every other week, so I pulled a year of receipts to see whether the same kinds of price swings showed up in my own history. They did: The price I paid for Kirkland thick-sliced bacon ranged from $14.75 to $17.59, a 19% jump for the same product. Kerrygold butter swung even more, from $11.58 to $17.58, a 52% difference. Even a pantry staple like Kirkland basil pesto moved between $10.37 and $11.43. Not everything shifted. Bananas stayed anchored at $1.63-$1.64 all year; Costco's famed $4.99 rotisserie chicken rang up as $5.46 throughout the year on Instacart with its extra fee. But the items with the biggest swings were the same as those CR flagged: branded staples and higher-margin products such as eggs, olive oil and blueberries. Price changes over time are normal -- after all, grocery prices rose about 2.7% over the past year. But the CR investigation worked by having volunteers shop simultaneously, exposing how people were getting different prices for the same goods as the same time. Like other customers, I can't replicate that just with my own receipts and reviewing prices over time at my local store, which makes it almost impossible to separate ordinary price changes from algorithmic testing. And that's the point: . Few people have the time or the data-wrangling skills to untangle whether a price hike is a seasonal shift or part of an AI-driven experiment running quietly in the background. You have to dig for the scant details Instacart provides on the prices it adds to your bill beyond its service fee for each delivery and your annual membership costs for both Costco and Instacart. At the top of each retailer's Instacart page, there's a small link called "Pricing & Fees." Clicking through pulls up a brief disclosure: retailers may charge more on Instacart, and a flat percentage markup is added to cover Instacart's service. What the policy doesn't say is how big that markup is or who sets it. When journalists have asked where the prices come from when you buy items from Costco through Instacart, the companies have pointed the finger at each other. Instacart has said, "each of our retail partners sets the prices." Costco has said the opposite: "Pricing above and beyond our walk-in warehouse price is set by Instacart." Instacart's own terms of service add another wrinkle, noting that the company may vary fees based on demand, order attributes or other factors -- language that reads very differently after the investigation into its algorithmic pricing experiments. Lawmakers are taking notice. This week, Senator Ruben Gallego (D-AZ) introduced the "One Fair Price Act," which would ban companies from charging customers different prices based on their personal data. "Experimenting with people's hard-earned money to see just how much you can get them to pay for food for their family isn't fair pricing," Jane Garza, Gallego's spokesperson, told Investopedia. "And with AI making surveillance pricing easier and faster, it's only going to get worse." California, Colorado and Pennsylvania are also considering legislation that goes beyond New York's notification requirement, banning surveillance pricing outright for certain retailers. For now, shoppers in the other 49 states are left to read the fine print -- and wonder what it's not telling them.

Yet Another Reason To Hate AI: Dynamically Priced Groceries

How would you feel about paying more for something because an algorithm determined you'd be willing to spend more, for the same item, than someone else? Bad, right? Turns out Instacart has been using "algorithmic pricing" to determine the price of items, sometimes increasing the costs of identical products by as much as 23 percent, according to a new report by Consumer Reports, Groundwork Collaborative and More Perfect Union. The report found Instacart showed different prices to every single one of 437 participants in the study as they assembled identical baskets of goods at the same retailers. Consumer Reports estimated the price swings would add up to around $1,200 more for groceries a year for the typical household. "Our investigation suggests that the scope of Instacart's price experiments -- which are taking place against the backdrop of the fastest increase in food prices since the late 1970s -- is far broader and more costly to some consumers than has been publicly acknowledged," the authors wrote. "Every one of the volunteer shoppers who participated in our tests was subject to algorithmic price experiments." Sadly, the predatory business model has attracted the attention of other industries. In July, Delta Airlines sparked outrage after its president mused about using AI to dynamically set individual ticket prices.

Exclusive | Lawmakers mull action on 'dynamic' AI-powered pricing in wake of...

Lawmakers are aiming to crack down on so-called "dynamic pricing" in the wake of a jaw-dropping report showing that grocery delivery app Instacart charged shoppers different prices for the same items at the same stores without telling them, The Post has learned. Members of Congress "were displeased, shocked, engaged and ready to consider legislative and oversight action," Lindsay Owens, executive director of consumer advocacy group Groundwork Collaborative told The Post on Thursday, after meeting with 15 lawmakers. The report finding Instacart charged hundreds of customers widely different prices at big chains including Target, Kroger, Safeway, Albertsons and Costco came as Sen. Ruben Gallego (D-Ariz.) introduced legislation to ban such practices. "Greedy corporations are compiling Americans' personal data and using AI to find their 'pain point' - the maximum they're willing to pay. That's not fair pricing, that's predatory pricing. My bill puts an end to it," Gallego said in a statement. The lawmaker flagged January research from the Federal Trade Commission showing that retailers "frequently use customers' personal information - everything from their location to the type of device they are searching on - to set tailored prices for goods and services," according to his office. In the House of Representatives, lawmakers are exploring ways to curb dynamic pricing, which sometimes employs AI tools to track customer data. "They wanted to know what types of legislation they could pursue to protect consumers from this practice," said Owens, who met with all Dems. The pols were part of the "Congressional Dad's Caucus" of Dems focusing on working families. Rep. Jimmy Gomez (D.-Calif.) said after meeting with Owens, he's "weighing next steps to bring costs down and rein in this type of pricing." "If Instacart's AI pricing is quietly, unfairly and/or deceptively making some people pay more for the same groceries, that's a big problem," he said in a statement to The Post. Any action on dynamic pricing would need GOP buy-in in the Republican-controlled House and Senate. The high cost of living has caught the attention of pols across the political spectrum in recent months. The Groundwork Collaboration report found that Instacart charged Target customers at a North Canton, Ohio store $2.99 for Skippy Creamy Peanut Butter one day in September - while other Instacart users that day paid as much as $3.59 for the same jar picked up from the same location. Target said in response to the findings that it is not "affiliated with Instacart and is not responsible for prices on the Instacart Platform." Instacart was likely trying to determine how much money it could make off of Target shoppers, Owens said. "At a place like Target which is not known for being on the low-end, Instacart was probably like 'this is an interesting place for us to explore a higher mark-up," she explained. Instacart did not immediately respond to a request for comment. The company previously told The Post that its price "tests," which "have now ended," are never based on personal characteristics of shoppers and do not change in real time.