Instacart’s AI-Driven Pricing Is Being Investigated by the FTC—Here’s What You Need to Know

Instacart’s use of AI-driven pricing is drawing attention from federal regulators. 

The Federal Trade Commission, a consumer protection agency, is looking into the grocery delivery giant’s use of AI pricing tools after an investigation found it was charging customers substantially different prices for the same items, according to a Reuters report Wednesday.

An investigation by Consumer Reports, Groundwork Collaborative, and More Perfect Union published earlier this month found prices for about three-quarters of surveyed items on Instacart varied by up to 23% from user to user among volunteers shopping at the same time. The report estimated such price variations could add up to about $1,200 per year in additional costs for the typical household shopping on Instacart. A review of an Investopedia editor’s transactions on Instacart found that prices for a range of products at Costco (COST) also varied from one order to the next.

“Much of what’s been reported has mischaracterized how pricing works on Instacart,” a company spokesperson told Investopedia. “First, our retail partners control their pricing strategies, and we work with them to align their online and in-store pricing wherever possible. Second, these tests are not dynamic pricing nor surveillance pricing—prices on Instacart do not change in real time nor are they based on supply or demand, and we never use personal, demographic, or user-level behavioral data to set item prices. These tests are a form of randomized A/B testing, similar to the way retailers have long run pricing tests between different stores,” the spokesperson said.

The FTC said in an emailed statement Thursday that it 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 sent Instacart a civil investigative demand over its Eversight pricing tool, named for a company that Instacart acquired in 2022, Reuters reported. The tool helps retailers test consumer reactions to different prices, and retailers who use the tool could see a 1% to 3% bump in revenue, according to Instacart’s website.

Early this year, the FTC said that “surveillance pricing,” which Instacart says it does not use, has become more popular among online retailers. With surveillance pricing, companies could use data about a shopper such as their location, browsing history, and even the movements of a computer mouse to guess how much they might be willing to spend and influence displayed prices.

Shares of Instacart parent Maplebear (CART) were down about 1% in recent trading. They’ve lost about 9% of their value since the start of the year.

This article has been updated since it was first published to include additional information.