This morning, Instacart announced it will end its use of AI-powered pricing experiments on consumers. The announcement follows the release of a bombshell report from Groundwork Collaborative, Consumer Reports, and More Perfect Union revealing Instacart charging shoppers different prices for identical items, a practice that could cost families as much as $1,200 a year in the midst of a national grocery affordability crisis.
The report generated widespread media coverage, sparked massive backlash on social media, and spurred a flurry of action on Capitol Hill, including a letter from Minority Leader Chuck Schumer to the Federal Trade Commission. Last week, the FTC launched an investigation into the company’s pricing practices, and Instacart’s stock price plummeted in response.
Groundwork Action’s Executive Director Lindsay Owens reacted with the following statement:
“Once we pulled back the curtain on Instacart’s hidden pricing experiments, the company had no choice but to close the lab. But it shouldn’t take investigative research, public outcry, and the threat of FTC action to convince companies not to treat consumers like lab rats. Instacart is far from the only corporation using AI technologies to determine exactly how much profit they can extract from their customers by overcharging them. It’s time for regulators to put a stop to corporate pricing schemes and take action to restore fair, predictable, and transparent pricing.”
Background:
- Last week, the FTC launched an investigation into Instacart’s Eversight pricing tool, which allows retailers on Instacart to experiment with different prices using AI and artificially drive prices higher.
- The investigation followed Groundwork Collaborative’s report with Consumer Reports and More Perfect Union, which found Instacart charged consumers wildly different prices for the exact same goods in the same store at the same time.
- The study involved 437 shoppers in live tests across four cities and found that:
- Almost three quarters (74%) of grocery items in the experiment were offered to shoppers at multiple price points on Instacart.
- Prices for the exact same item in the exact same store varied by up to 23% between shoppers.
- Researchers found that overall Instacart basket totals varied by an average of about 7%.
- Instacart’s price experimentation could cost the average household up to $1,200 every year in additional spending.
This content originally appeared on Common Dreams and was authored by Newswire Editor.