The Federal Trade Commission announced that Instacart will pay $60 million in refunds to consumers as part of a settlement resolving allegations of deceptive practices that increased grocery shopping costs.

Under the proposed settlement, which awaits approval from the U.S. District Court for the Northern District of California, Instacart is required to stop misleading advertising practices.

The FTC’s investigation revealed what the agency called multiple deceptive tactics used by the company, including misleading claims of “free delivery” that actually required consumers to pay service fees as high as 15%. This lack of transparency led to increased costs for grocery shopping without adequate disclosure of fees.

The company said on its blog that there is a difference between delivery fees and service fees.

“We clearly and consistently distinguish delivery fees from service fees, which are always shown as a separate, itemized line,” Instacart said.

Furthermore, the FTC alleged that Instacart’s satisfaction guarantee was misleading. Consumers who experienced issues such as late deliveries were often provided only small credits for future orders instead of full refunds, which they were entitled to.

Additional concerns revolved around the process of enrolling in Instacart+, the company’s subscription service. The FTC said many consumers were charged membership fees without their informed consent, often dismissing the restrictive refund policy during the sign-up process, which was not clearly disclosed.

Instagram, however said, that it “makes it incredibly quick and easy to cancel membership.”

“Unlike other platforms where cancellation is hidden or burdensome, we provide a prominently placed cancel button – accessible through the same platform consumers used to sign up," the company said.

Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said in a news release, “Instacart misled consumers by advertising free delivery services — and then charging consumers to have groceries delivered — and failing to disclose to consumers that signed up for a free trial that they would be automatically enrolled into its subscription program.”

The delivery company wrote on its blog in reaction to the settlement that it denies any wrongdoing and that the investigation was “fundamentally flawed.”

Instacart added, “And to avoid potential confusion, we want to clarify that, as of this settlement announcement, we are not aware of any other pending FTC investigations. We stand firmly behind the integrity, transparency, and value of our programs.”

Instacart will be required to provide refunds to those charged for the Instacart+ subscription without informed consent and to implement clearer disclosures about delivery service costs and satisfaction guarantees. The company must also ensure that consumers provide express consent before automatic charges for subscriptions can occur, the FTC said.

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