New York Attorney General Letitia James has fired a salvo against online grocery behemoth Instacart, demanding answers over the company’s use of algorithmic pricing that resulted in shoppers being charged vastly different prices for identical products.
The legal offensive stems from a recent study by Groundwork Collaborative and Consumer Reports, which showed that Instacart was experimenting with prices, leading to some customers paying up to 23 percent more than others for the same items. The Attorney General’s office warns that such practices could be in violation of New York’s Algorithmic Pricing Disclosure Act.
According to the law, companies must disclose when they are using personal data to set individualized prices, a requirement that Instacart is accused of flouting. ‘Charging different prices for the exact same products leaves shoppers feeling cheated and threatens to raise costs at a time when consumers are already paying too much,’ James stated.
The study revealed that nearly three-quarters of grocery items tested on Instacart were available at multiple prices, with an average difference of 13 percent. This discrepancy could result in additional annual costs of up to $1,200 for a typical family of four.
Instacart responded by ending its ‘item price tests’ but suggested that its partners, including grocery stores and food brands, could continue experimenting with promotions and discounts. Attorney General James, however, is not satisfied, pointing out that the disclosures Instacart provides are buried in fine print and do not meet the legal requirements for clear disclosure.
In her letter to Instacart, James demands detailed information about the company’s pricing tactics, its agreements with retail partners, the automated tools used for price adjustments, and compliance efforts regarding New York’s Algorithmic Pricing Disclosure Act.
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Key Facts
- State: New York
- Agency: NY AG
- Category: Fraud & Financial Crimes|Cybercrime|Public Corruption
- Source: Official Source ↗
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