FTC Orders Instacart to Provide $60 Million in Refunds Over Deceptive Practices Claim
Discover how Instacart's $60M FTC settlement underscores the need for honesty in digital business practices. A key case for ethics and social responsibility!
In December 2025, grocery delivery company Instacart agreed to pay $60 million to settle a lawsuit brought by the Federal Trade Commission. The case focused on allegations that Instacart used deceptive marketing and enrollment practices that caused customers to pay more than they expected.
Instacart’s Business Model
Instacart is an online grocery delivery platform that allows customers to order groceries, alcohol, and other products from local stores through a mobile app or website. Shoppers select items, place an order, and have deliveries sent to their homes.
Instacart generates revenue through delivery fees, service fees, markups on certain items, and subscriptions such as Instacart+. Because Instacart operates as an intermediary between consumers and retailers, transparency around pricing and fees is essential. Customers rely on clear information to decide whether the convenience of delivery is worth the additional cost.
The Federal Trade Commission
The Federal Trade Commission is the U.S. government agency responsible for protecting consumers and promoting fair competition. One of its primary functions is to prevent deceptive or unfair business practices. When the FTC believes a company has misled consumers, it can file a lawsuit, seek financial penalties, and require changes to business practices.
In this case, the FTC argued that Instacart violated consumer protection laws by advertising certain benefits that were not delivered as customers reasonably expected.
Deceptive Practices
The FTC alleged that Instacart promoted free delivery for first time users while still charging mandatory service fees, sometimes up to 15% of the order total. According to the FTC, these fees functioned as delivery charges under another name and were not clearly explained upfront.
The agency also challenged Instacart’s use of a one hundred percent satisfaction guarantee. Customers were led to believe they would receive full refunds if they were dissatisfied. In practice, many customers received only small credits for future orders rather than refunds. The option to request a refund was reportedly difficult to find, which may have caused consumers to assume refunds were unavailable.
Another focus of the settlement involved Instacart+, the company’s subscription program. The FTC alleged that Instacart did not clearly inform users that a free trial would automatically convert into a paid membership at the end of the trial period. Some consumers were charged membership fees without fully understanding the terms or receiving the expected benefits. The FTC also stated that Instacart’s refund policies for subscriptions were restrictive and not clearly disclosed. As a result, many customers paid for memberships they did not use and could not easily cancel or recover their money.
Terms of the Settlement
Under the settlement, Instacart agreed to pay $60 million in refunds to affected consumers. The company must also stop making misleading claims about delivery costs and satisfaction guarantees. In addition, Instacart is required to clearly disclose subscription terms and obtain explicit customer consent before enrolling users in programs that involve automatic charges.
Instacart denied wrongdoing and stated that it believes its pricing and subscription practices comply with legal standards. The company said that it distinguishes between delivery fees and service fees and that its subscription terms are clearly communicated.
The Instacart FTC settlement illustrates how consumer protection laws apply to modern digital businesses. As more companies rely on subscriptions and platform based models, regulators are paying closer attention to how costs and terms are communicated.
In the Classroom
This article can be used to discuss fairness and honesty (Chapter 2: Business Ethics and Social Responsibility).
Discussion Questions
- Why did the FTC consider Instacart’s free delivery advertising to be misleading, even though delivery fees were technically waived?
- Describe the problems the FTC identified with Instacart+’s free trial enrollment and explain how those practices could lead consumers to be charged without full consent.
- What lessons can other subscription-based businesses learn from the Instacart settlement regarding transparency and consumer consent?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.
Catherine Douglas Moran, "Instacart to Pay $60M in Settlement of FTC Lawsuit," Grocery Dive, December 19, 2025, https://www.grocerydive.com/news/instacart-settles-ftc-lawsuit-ecommerce-fees/808336/
Federal Trade Commission, "Lawsuit Over Allegations it Engaged in Deceptive Tactics," December 18, 2025, https://www.ftc.gov/news-events/news/press-releases/2025/12/instacart-pay-60-million-consumer-refunds-settle-ftc-lawsuit-over-allegations-it-engaged-deceptive
Katherine Hamilton, "Instacart Ordered to Pay $60 Million to Settle FTC Deceptive-Practices Claim," The Wall Street Journal, December 18, 2025, https://www.wsj.com/business/instacart-ordered-to-pay-60-million-to-settle-ftc-claim-of-deceptive-practices-c1eefc65
Linda Ferrell is the Roth Family Professor of Marketing and Business Ethics in the Raymond J. Harbert College of Business, Auburn University. She was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University. She completed her Ph.D. in business administration, with a concentration in management, at the University of Memphis. She has taught at the University of Tampa, Colorado State University, University of Northern Colorado, University of Memphis, University of Wyoming, and the University of New Mexico. She has also team-taught classes at Thammasat University in Bangkok, Thailand.
