The situation: The fallout from Instacart’s price-testing experiment, which caused some consumers to pay higher grocery prices, continues to build.
- New York Attorney General Letitia James sent a letter to Instacart demanding detailed information about its price-setting practices, raising the possibility that the test violated a new state law.
- That move followed intensifying national scrutiny, driven in part by lawmakers publicly calling out the company. Senate Minority Leader Chuck Schumer of New York urged the Federal Trade Commission to investigate, Rep. Angie Craig of Minnesota accused Instacart of “scamming” families, and Sen. Ruben Gallego of Arizona introduced legislation aimed at curbing so-called “surveillance pricing.”
The context: A report from Consumer Reports and Groundwork Collaborative found that Instacart customers were charged different prices for identical products, with price gaps as wide as 23%. The algorithmic pricing tests spanned multiple retail partners, including Albertsons, Costco, Kroger, Safeway, Target, and Sprouts Farmers Market.
Amid the backlash, Instacart shut down the pricing technology, while maintaining that it did not use demographic data and did not engage in dynamic or surveillance pricing.
Implications for brands: Even if Instacart ultimately avoids legal or regulatory penalties, the episode has meaningfully hurt its brand. Grocery shopping is a high-frequency category built on long-standing consumer relationships. A perception that prices may vary unfairly undermines confidence at a time when consumers are highly price-sensitive and have ample alternatives—from retailer-owned apps to Amazon and other delivery platforms. Once trust is lost, winning it back can be far more costly than any fine.
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