Washington, DC – Following a joint report by Consumer Reports, Groundwork Collaborative, and More Perfect Union revealing that Instacart conducted AI-driven pricing experiments on unsuspecting shoppers, the New York Attorney General sent a letter today to the company demanding more information about its price-setting tactics. New York’s recent Algorithmic Pricing Disclosure Act requires companies to clearly and conspicuously state when they are using consumers’ personal data to affect prices.
The joint report found that many U.S. shoppers who ordered grocery pickup and delivery through Instacart were unknowingly enrolled in AI-enabled experiments that could charge up to 23% more for the same item ordered from the same store at the same time. The average price variations observed in the study could cost a household of four about $1,200 per year. While Instacart announced in a company blog post on December 22 that it was ending its customer experiments on “item prices,” the New York Attorney General is seeking more detailed information from the company.
“We welcome the New York Attorney General’s investigation into Instacart’s hidden AI pricing tactics,” said Justin Brookman, director of marketplace policy at Consumer Reports. “This move is an important step in holding the company accountable and sends a clear warning to others. We urge regulators and policymakers across the country to take a closer look at how these AI experiments impact consumers.”
Following the publication of the joint investigation, U.S. Senator Ruben Gallego announced the introduction of the “One Fair Price Act,” which would prevent companies from using consumers’ personal data to set individualized prices. Separately, in Pennsylvania, a state senator cited the report in announcing plans to introduce similar legislation that would prohibit “surveillance pricing,” the use of personal data or demographic information, shopping history, and buyer behavior to set prices.
Additionally, at least 12 members of Congress followed suit with formal letters to Instacart and the FTC, which regulates U.S. grocery stores. The ranking member of the House Committee on Agriculture, U.S. Rep. Angie Craig sent a letter to Instacart, reiterating the report findings and requesting answers from the company regarding its pricing practices by mid-January. U.S. Senate Minority Leader Chuck Schumer sent a separate letter to the FTC, requesting that the agency investigate the company. A group of four House members known as the “Monopoly Busters Caucus” sent yet another letter to the FTC.
Seven senior senators have called on the FTC to investigate Instacart’s pricing strategies. This comes as Reuters reports that the commission is officially probing the company’s use of AI-driven pricing tools.
Contact: cyrus.rassool@consumer.org