Instacart halts ‘item price tests’ amid scrutiny of its AI tools

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.”