Instacart settles with FTC over deceptive practices but still faces questions about pricing

印刷用画面を開く

Posted

Category: Business

Listening

Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. settlement / ˈsɛt l mənt / (n.) – an agreement to end a dispute, often involving money, without going to court or before a trial ends
    Example:

    The company agreed to a settlement to avoid going to court.


  2. alleged / əˈlɛdʒd / (adj.) – referring to something said to be true, but not proven
    Example:

    He was questioned about the alleged fraud.


  3. unprofessional / ˌʌn prəˈfɛʃ ə nl / (adj.) – referring to behavior, actions, or appearance that are not suitable for a job or workplace
    Example:

    Many customers complained about the staff’s unprofessional service.


  4. wrongdoing / ˈrɔŋˌdu ɪŋ / (n.) – bad or illegal actions, especially actions that break the law, rules, or ethical standards
    Example:

    Company leaders denied any claims of wrongdoing within the organization.


  5. drive up / draɪv ʌp / (phrasal v.) – to make something increase, usually prices, costs, numbers, or levels
    Example:

    The new tax will drive up the cost of electricity.


Article

Read the text below.

Delivery company Instacart will pay $60 million in customer refunds under a settlement reached with the Federal Trade Commission (FTC) over alleged deceptive practices.


The FTC said that Instacart has been falsely advertising free deliveries. The San Francisco-based company isn’t clearly disclosing service fees, which add as much as 15% to an order and must be paid for customers to receive their groceries, the FTC said.


Instacart has also failed to clearly disclose that customers who enroll in a free trial for its Instacart+ program will be charged membership fees at the end of the trial. The FTC said hundreds of thousands of customers have been charged but have received no benefits from memberships or refunds. Instacart+ offers members free deliveries on most orders for $99 per year.


The FTC said Instacart also advertises a “100% satisfaction guarantee,” but customers who experience late deliveries or unprofessional service are typically only offered a small credit that can be used toward a future order and not a refund.


“The FTC is focused on monitoring online delivery services to ensure that competitors are transparently competing on price and delivery terms,” said Christopher Mufarrige, the director of the FTC’s Bureau of Consumer Protection.


Instacart denied the FTC’s allegations of wrongdoing but said it reached a settlement in order to move forward and focus on its business.


“Instacart is proud to offer a transparent, affordable, and consumer-friendly service. We provide straightforward marketing, transparent pricing and fees, clear terms, easy cancellation, and generous refund policies—all in full compliance with the law and exceeding industry norms,” the company said in a statement.


The settlement comes as Instacart is facing separate questions about its pricing practices.


In December, a report by Consumer Reports and two progressive advocacy groups—Groundwork Collaborative and More Perfect Union—found that Instacart charged different prices for the same grocery items even though online shoppers were filling their Instacart baskets at the same time and at the same stores.


The report suggested that Instacart may be using artificial intelligence tools to drive up costs for consumers.


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Instacart failed to clearly disclose that customers who enroll in a free trial for its Instacart+ program will be charged membership fees at the end of the trial. Do you often sign up for free trials from certain services? Why or why not? In your opinion, should companies offering free trials remind customers about the end of a free trial period before charging them? Why do you say so? Discuss.
  • According to the FTC, service fees were not clearly disclosed, even though customers had to pay them to receive groceries. How do hidden or unclear fees affect your trust in a company? Do you think companies should be punished more for unclear fees? Why or why not? Discuss.

Discussion B

  • Instacart denied wrongdoing but agreed to a $60 million settlement to move forward. In your opinion, what message does a settlement send if a company does not admit fault (ex. the company just wants to bury the issue)? Is paying a settlement enough, or should companies also change how they communicate with customers? Why do you say so? Discuss.
  • What makes you trust or distrust an online delivery service? After hearing stories about companies overcharging customers and having hidden fees, would you change how you shop online? Why or why not? Discuss.