The US Federal Trade Commission is investigating online retail and delivery company Instacart over an AI-driven pricing tool, Reuters reported.
The company’s sagged as much as 10 percent in after-hours trading following the report, before recovering.
The FTC has sent the company a civil investigative demand and is seeking information about the pricing tool, Reuters said, citing unnamed sources.
AI experimentation
The software, which allows retailers to experiment with different prices using AI, drew criticism after studies found different shoppers were shown dramatically different prices for the same items.
The FTC said in a statement that it does not comment on investigations, but was “disturbed” about reports of Instacart’s pricing practices.
The platform allows people to buy from local retail outlets, with purchases being conducted by a personal shopper. In most cases retailers themselves set their prices using Instacart’s tools.
A study conducted by advocacy groups Groundwork Collaborative, Consumer Reports, and More Perfect Union found an average 7 percent difference in total cost for the same grocery list at the same store.
The study, involving 437 shoppers, found some were shown prices up to 23 percent higher than those available to other shoppers for the same items, at the same store, at the same time.
Instacart said retailers who run price tests using its Eversight AI tool to gauge shoppers’ reactions see revenue growth of 1 to 3 percent.
Cost of living
The Eversight pricing tests were randomised, and are not based on fluctuations in demand or individual data and behaviors, Instacart has said.
US Senator Chuck Schumer said consumers “deserve to know when they are being placed into pricing tests” and argued the FTC should require a prominent on-screen label.
