This is absolutely illegal. They are defrauding customers. No one would voluntarily add money to an order if it was labeled as "donation to Instacart" instead of "tip". They are deceiving customers to get money from them.
This really probably doesn't add up to fraud. There's a difference between being scummy and crime. This should be illegal of course, but it really probably isn't. Restaurants illegally take tips from their employees all the time, which would be a fraud against customers in the same way as this case. However, they don't get into trouble for fraud against customers, but wage theft. That of course doesn't apply to Instacart.
