Grocery delivery service stocks instacart Shares fell about 7% in after-hours trading on Wednesday after reports that the Federal Trade Commission had opened an investigation into the company’s pricing practices.
The FTC has sent a civil investigation request to Instacart, Reuters reported, citing anonymous sources.
“The Federal Trade Commission has a long-standing policy of not commenting on potential or ongoing investigations,” the FTC told CNBC in a statement. “But like many Americans, we are concerned about what we have read in the press about Instacart’s pricing allegations.”
According to a study released last week, the price of the same item at the same supermarket that works with Instacart can vary by about 7%, which can cost customers more than $1,000 a year in additional costs. In response, Instacart said the prices listed on its app are determined by retailers.
In 2022, Instacart spent $59 million to acquire Eversight, a company that specializes in artificial intelligence-driven pricing and promotions for retail and consumer packaged goods. Instacart worked with Eversight to “create attractive savings opportunities for customers in real time,” according to regulatory filings.
Instacart declined to comment on the investigation, but said the report mischaracterized the company’s pricing system.
“Much of what has been reported misrepresents how pricing works at Instacart,” a company spokesperson said in an email. “First, our retail partners control our pricing strategy, and we work with our retail partners to adjust our online and in-store prices wherever possible. Second, these tests are not dynamic or monitored pricing. Instacart prices do not change in real time and are not based on supply and demand, and we do not use individual, demographic, or user-level behavioral data to price our products.”
“These tests are a type of randomized A/B testing, similar to how retailers have been conducting price tests across different stores for years.”
Earlier Wednesday, House Democratic Representative Robert Garcia of California sent a letter to Instacart CEO Chris Rogers asking for a report on the company’s pricing practices.
“It is unconscionable that companies are increasing the financial burden on Americans with algorithmic and potentially surveillance-like pricing,” Garcia, ranking member of the House Committee on Oversight and Government Reform, wrote.
— CNBC’s Annie Palmer contributed to this report
Read the full Reuters report here.
