Instacart ends AI pricing tests that increased costs for some shoppers

Instacart It said Monday it would halt the use of artificial intelligence-based pricing tests on its grocery delivery platform after the practice was scrutinized in a wide-ranging study and rebuked by lawmakers.

The company said in a blog post Retailers will no longer be able to use Eversight’s technology to run pricing experiments on its platform, effective immediately.

“We understand that our testing with a small number of retail partners, which resulted in different prices for the same product in the same store, missed the mark for some customers,” the company wrote. “At a time when families are working incredibly hard to make up for every dollar they buy at the grocery store, these tests have raised concerns and caused some people to question the prices they see on Instacart. That’s OK—especially for a company built on trust, transparency, and affordability.”

Instacart acquired foresight Eversight’s software allows retailers to run pricing tests to gauge shoppers’ reactions to high or low prices on certain products.

Instacart said at the time that the technology would help retailers increase sales and growth while also uncovering the best deals for customers.

An investigation by Consumer Reports and other organizations earlier this month found that Instacart’s algorithmic pricing tools caused shoppers to pay different prices for the same items at the same store.

The total cost of the same cart of products within a single store varies by approximately 7%, which can result in more than $1,000 in extra costs for customers annually. Instacart responded by saying retailers set the prices listed on the app.

The company also rejected any description of the technology as surveillance pricing or dynamic pricing, saying the tests were never based on personal, demographic or individual-level user data.

Reuters reported last week that the Federal Trade Commission sent Instacart a request for a civil investigation into its pricing practices.

Separately, last week Instacart was ordered to refund customers $60 million to resolve allegations by the FTC that it used deceptive tactics in subscription registration, “satisfaction guarantee” ads and other processes.

Instacart has denied any allegations of wrongdoing. The company said it responded to the FTC’s questions about its AI pricing tools as part of that settlement.