Instacart has ended its AI-powered pricing tests following backlash after a study reported customers were shown different prices for the same items from the same store.
As PCMag reports, the company said in a blog post, “Effective immediately, Instacart is ending all item price tests on our platform. Retailers will no longer be able to use Eversight technology to run item price tests on Instacart.” The study, conducted by Consumer Reports, Groundwork Collaborative, and More Perfect Union, involved 437 volunteers in live tests across four cities.
Those involved were instructed to add the same items to their cart, and around 74% of them saw varying prices. The average difference between the highest and lowest prices for an item was 13%. Over the course of a year, this could force an average American family of four to shell out an extra $1,200, the study found.
Instacart said it was running these experiments in partnership with retailers to help understand how sensitive customers are to prices of certain items. It clarified that this wasn’t dynamic pricing, but randomized A/B testing with retailers setting their own prices. The grocer also denied the study’s claim about families needing to pay an extra $1,200 each year.
Last week, Reuters reported that the Federal Trade Commission (FTC) had sent Instacart a civil investigative demand seeking more information about the AI pricing tool it was using for these tests, Eversight. The agency said it was “disturbed” by what it had read about it in the press.
Members of Congress had also requested the FTC to look into the matter. In a Dec. 14 letter, Sen. Chuck Schumer (D-NY) said that “Consumers deserve to know when they are being placed into pricing tests,” and urged the agency to “require a prominent on-screen label.” On Dec. 17, Sen. Amy Klobuchar (D-MN) and seven others urged the FTC to investigate Instacart’s tactics, citing concerns around higher food prices amid less competition.
“Grocery prices are already too high—Americans shouldn’t be forced to pay even more because companies use artificial intelligence to inflate prices,” Sen. Klobuchar said in a statement to PCMag. “Customers deserve fair prices and real competition to lower costs.”
Following backlash, Instacart has decided to end the AI pricing experiments and display the same prices for everyone. “Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices — period,” the company said.
It’s been a rough couple of weeks for Instacart. The company recently settled an FTC lawsuit that claimed it misled customers about delivery fees and agreed to refund $60 million to affected users.
—
Photo Credit: SergioVas / Shutterstock.com