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THE BLUEPRINT:
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Consumer Reports alleges Instacart uses AI to charge shoppers different prices for the same items
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Sen. Chuck Schumer urges the FTC to investigate Instacart’s pricing practices
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Grocery prices reportedly varied by as much as 23 percent between shoppers
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Instacart says retailers control pricing and randomized pricing tests follow “strict guardrails”
An investigation by Consumer Reports and the Groundwork Collaborative alleges that Instacart uses artificial intelligence to charge different shoppers on Long Island and elsewhere different prices for the same items. Citing those findings, U.S. Sen. Charles Schumer is urging the Federal Trade Commission to intervene.
“When a shopper fills their grocery cart whether in real life or digitally, they should trust that they are being treated fairly and that prices are transparent,” Schumer said in a news release.
“What we are seeing more and more of is that companies like Instacart are using artificial intelligence to rip off consumers by charging different shoppers different prices for the same exact items,” he said.
“This is jacking up grocery costs across New York City, Long Island, and across the nation,” he added. “So, today, I am sounding the alarm on this predatory practice and demanding the federal government take new action to protect families from this shakedown pricing.”
The investigation comes at a time when consumers are grappling with rising grocery costs, with 71 percent saying they are spending more this year than last year, according to an ABC News/Washington Post/Ipsos poll published in November.
Last week, President Donald Trump issued an executive order establishing task forces to examine potential price-fixing across the food supply chain.
Meanwhile, the Consumer Report and Groundwork Collaborative investigation release last week alleged that in some instances grocery prices varied by as much as 23 percent from shopper to shopper.
Instacart, meanwhile, said in a Dec. 9 blog that it is “doubling down on affordability and convenience.”
The company said in the blog that
“While we have made real progress working with our retail partners to drive affordability through loyalty integrations, same-as-in-store pricing, and more – retail partners on our platform control their pricing strategies. Some choose to apply online markups to help offset the cost of providing same-day delivery to customers. To ensure customers can make the most informed choices when buying groceries from their favorite retailers, we display every retailer’s pricing policy on their Instacart storefront so customers know when prices may differ from in-store and can easily compare across retailers.
Additionally, just as retailers have long tested prices in physical stores to understand what resonates with customers, a small subset of our retail partners – 10 U.S. retail partners that already choose to apply markups – use Instacart’s Eversight technology to run limited online pricing tests. These short-term, randomized tests help retail partners understand category-level price sensitivity so they can sustainably invest in lower prices where consumers care most. For example, as a result of these tests, some consumers may see slightly lower prices on essentials like milk or bread, and slightly higher prices on items like specialty snacks or craft beverages.”
The company added that “these short-term, randomized tests follow strict guardrails.”
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Adina Genn
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