Advocate Calls for Investigation into Instacart’s Pricing Practices

A recent report has raised concerns about Instacart charging some customers significantly higher prices for identical grocery items, prompting calls for an investigation. Lindsay Owens, the executive director of Groundwork Collaborative, urged state attorneys general to scrutinize the practice, which she argues undermines market fairness and transparency. According to Owens, the pricing variations could potentially violate consumer protection laws.

Owens pointed out that a Consumer Reports investigation involving 437 volunteer shoppers revealed price discrepancies as high as 23 percent for identical items, resulting in some customers paying between $0.07 and $2.56 more than others. “This is why we have laws to safeguard our markets and ensure transparency,” she said. “I really think it should be up to policymakers to take a close look at this.”

The investigation highlights the potential for retailers to engage in what is known as “surveillance pricing,” where personal data is used to set individualized prices. However, Instacart responded to inquiries from Scripps News by stating, “These tests are not dynamic pricing — prices never change in real time, including in response to supply and demand. The tests are never based on personal or behavioral characteristics — they are completely randomized.”

Owens emphasized that while the report indicated the pricing differences appeared random, the cumulative effect on consumers could be substantial. “Even these small price hikes can add up for families at a time when groceries are already unaffordable,” she noted. Based on the average grocery spending for a household of four, Consumer Reports estimated that these price variations could result in an additional annual cost of around $1,200.

Instacart’s pricing strategy has been in place since the company began using Eversight, a platform for “continuous revenue optimization,” in 2022. According to Instacart, these short-term, randomized pricing tests allow some shoppers to see lower prices while others may experience slight increases. The company claims this approach aids retail partners in understanding consumer preferences and identifying where to lower prices.

Despite Instacart’s assurances, Owens raised concerns about the lack of transparency in their practices. “Experiments like these, particularly ones being run without our knowledge, are incredibly deceptive,” she stated. She further criticized the company’s approach, suggesting that the underlying technology they use to conduct these pricing experiments implies that secrecy is a feature rather than a flaw.

As discussions continue about the implications of these pricing practices, Owens has called on state attorneys general to take action. She believes it is essential to determine whether these pricing experiments violate existing laws that protect consumers. The situation underscores the ongoing debate regarding ethical pricing strategies in the digital marketplace and the impact on everyday shoppers.