The Federal Trade Commission has sent Instacart a civil investigative demand, seeking information about its AI-powered pricing tool, according to Reuters. This comes after a recently published pricing experiment study showed that the online grocery delivery app gave different users different prices for the same items from the same store location at the exact same time. Some of the testers saw prices up to 23 percent higher than what the other testers saw, though the average difference for the same list of items was around 7 percent. Those higher prices could cost customers over $1,000 more in expenses for the year.
“The Federal Trade Commission has a longstanding policy of not commenting on any potential or ongoing investigations,” the FTC told Reuters in a statement. “But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices.”
When the study came out, Instacart told Engadget that the pricing variances were caused by some of its retail partners doing “limited, short-term and randomized tests” to better understand consumers. Those randomized pricing tests were enabled by Instacart’s AI pricing tool called Eversight developed by a company it purchased in 2022. Instacart told CNBC that “much of what’s been reported has mischaracterized how pricing works” on its platform. The spokesperson repeated that retailers conduct pricing tests on its app and said that “prices on Instacart do not change in real time,” aren’t based on supply or demand and that it never uses “personal, demographic, or user-level behavioral data to set item prices.”
This article originally appeared on Engadget at https://www.engadget.com/apps/the-ftc-is-reportedly-investigating-instacart-over-its-ai-pricing-tool-130000472.html?src=rss