Federal regulators are ripping into Instacart after its AI pricing tool was found out doing this to drain your wallet

The Federal Trade Commission has officially sent Instacart a civil investigative demand, seeking crucial information about the company’s AI-powered pricing tool, as reported by Engadget. This regulatory move comes right after a recently published study showed some seriously questionable pricing practices that appear to be draining customers’ wallets.

The study found that the online grocery delivery app was giving different users completely different prices for the exact same items, from the same store location, at the exact same time. That level of inconsistency is just awful for consumers who rely on these services for budgeting and expect a level playing field.

The pricing experiment showed huge variances in what customers were charged. Some of the testers saw prices up to 23 percent higher than what the other testers saw for the same products. While that 23 percent is the top-end difference, the average price variance for an identical list of groceries was still around 7 percent. That means, if you’re using Instacart regularly, those higher prices could easily cost you over $1,000 in extra expenses throughout the year.

It’s a massive, hidden surcharge just because of an algorithm deciding what you should pay

Instacart is, predictably, pushing back hard against the claims that their platform is unfairly price-gouging customers. The company insists that “much of what’s been reported has mischaracterized how pricing works” on their platform. They claim that the price variances are actually caused by their retail partners running “limited, short-term and randomized tests” designed to better understand how consumers react to price changes.

These randomized pricing tests are enabled by Instacart’s specific AI pricing tool, Eversight. Instacart acquired the company that developed Eversight back in 2022, and it’s clearly a core part of their platform strategy. Instacart insists that it never uses “personal, demographic, or user-level behavioral data to set item prices.” Furthermore, they stated that prices on the app don’t change in real time, nor are they based on supply or demand. Wildly different gas prices in the US are a precedent they might leverage.

Despite Instacart’s firm denial that their AI tool is targeting individual users for higher prices, the federal regulators aren’t completely convinced. The FTC released a statement acknowledging that they have a longstanding policy of not commenting on any potential or ongoing investigations. However, they added a very sharp note that should worry Instacart executives about the seriousness of the situation.

The FTC said, “But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices.” When the regulator says they’re “disturbed,” you know this isn’t going to be a quick conversation for the delivery giant.

Besides going after major TV makers for data theft, the FTC is also clearly ready to dig deep into Instacart to find out exactly how much that AI tool is costing us all.