Instacart, a grocery delivery service, revealed on Monday its decision to discontinue its contentious price testing. This resolution comes after a Consumer Reports investigation indicated that Instacart’s AI-based pricing trials may be raising grocery costs. The investigation found that these trials led to varying prices for identical products across different consumers, with discrepancies reaching as high as 23 percent. According to Consumer Reports, this could translate to an additional $1,200 in yearly grocery expenses. The report also highlighted that in 2022, Instacart acquired an AI firm, Eversight, and began offering pricing software to retailers to “optimize” pricing.
In reaction, multiple lawmakers have taken action against personalized pricing. Democratic Sen. Ruben Gallego of Arizona proposed a bill to tackle “surveillance” pricing, while Democratic Minnesota Rep. Angie Craig penned a letter to Instacart for clarification. Democratic Senate Minority Leader Chuck Schumer of New York also sent a letter to the Federal Trade Commission (FTC), both citing the Consumer Reports investigation.
Last week, Instacart disputed allegations that the experiments involved dynamic or surveillance pricing, characterizing them instead as random A/B tests. The company also refuted claims that these tests led to an extra $1,200 annual cost for a typical household.
Today, Instacart declared the cessation of these price trials. “We recognize that the tests conducted with a limited number of retail partners that led to differing prices for the same item at the same store did not meet the expectations of some customers,” the blog post indicated. “Effective immediately, Instacart is ending all item price tests on our platform. Retailers will no longer utilize Eversight technology to conduct item price tests on Instacart.” The post specified that this adjustment guarantees that two families shopping for the same items at the same time in the same store location on Instacart will encounter the same price.
An Instacart representative emphasized that these tests were neither dynamic nor surveillance pricing and were not determined by personal, demographic, or user-level behavioral traits. “We’ve carefully considered customer feedback, and we recognize these tests did not meet their expectations,” the representative stated.
This announcement follows the FTC’s recent statement that Instacart will compensate consumers $60 million as part of a settlement. The FTC’s lawsuit claimed Instacart engaged in deceptive practices, such as misleadingly promoting “free delivery” and not revealing the terms of its Instacart+ membership. Instacart denied these charges.