As of Monday, New York City customers ordering from Instacart will now pay an additional fee.
The fixed $5.99 fee, labeled “NYC regulatory response fee” on the company’s website, is intended to offset increased operating costs stemming from government regulations on delivery platforms, according to Instacart. The charge comes as new city rules expanding minimum pay protections for grocery delivery app drivers took effect.
The new regulations state that delivery drivers must receive at least $21.44 per hour before tips, with provisions for annual increases. The regulations also require food delivery platforms to include a pre-checkout tipping option, which will be set to a minimum default of 10% of the order total.
The new charge adds to Instacart’s existing fee structure, which can include delivery, service, long-distance, priority service, late-night orders and bottle deposits.
Instacart criticized the city’s approach in a statement, calling the measures misguided and burdensome. The company also said it had cautioned officials about potential cost increases.
“For months, we raised clear, data-backed concerns that the policy would increase grocery delivery costs for New Yorkers, but those warnings were repeatedly ignored,” the statement said.
This fee comes at a turbulent time for the company. In December, U.S. Sen. Charles Schumer called on federal regulators to investigate Instacart it’s use of artificial intelligence to charge different customers varying prices for identical items. The call to action followed the release of a massive investigation conducted by Consumer Reports and Groundwork Collaborative, which found that Instacart charged some customers up to 23% more when purchasing the same item.
“When a shopper fills their grocery cart whether in real life or digitally, they should trust that they are being treated fairly and that prices are transparent. What we are seeing more and more of is that companies like Instacart are using artificial intelligence to rip off consumers by charging different shoppers different prices for the same exact items,” said Schumer, a Democrat who represents New York.
This investigation led to the grocery delivery service discontinuing what they referred to as “item pricing tests.”
In the same month, the company settled FTC allegations for $60 million over misleading claims about its Instacart+ membership and free delivery promotions.