On November 19, the District of Columbia filed a complaint against DoorDash (District of Columbia v. DoorDash) for violating the Consumer Protection Procedures Act (CPPA).
The complaint alleged that DoorDash enacted deceptive trade practices from around July 2017 to September 2019. DoorDash deceived customers into believing that the tip they left online was for the delivery worker (“the Dasher”). Most consumers falsely assumed that the tip they added to the delivery charge would go to the Dasher in addition to payment from DoorDash. However, the tip was used to subsidize DoorDash’s Guaranteed Amount (the agreed minimum payment) to the Dasher. Thus, customer tips were benefitting DoorDash and its bottom dollar, not the Dashers. There have been other suits in relation to this allegedly deceptive practice. Additionally, DoorDash is facing suit for its classification of Dashers as independent contractors.
The complaint stated that after the consumer placed their DoorDash food order, he or she is taken to a checkout screen to receive a subtotal and the option to tip the Dasher. After tip confirmation, the order is placed. When an order is confirmed, DoorDash presents orders to nearby Dashers, shows the route and the Guaranteed Amount for the job with a limited time to accept or decline the delivery. The guaranteed amount was set by DoorDash and would be the minimum amount they would earn if they accepted and successfully completed the job.
The complaint explained “DoorDash’s payment model for all orders was that it would pay $1 plus the remainder of the Guaranteed Amount not covered by the consumer’s tip. Take, for example, a job where DoorDash set the Guaranteed Amount at $10. If a consumer tipped $0, DoorDash would pay $10 ($1 + $9 remainder). If a consumer tipped $9, DoorDash would pay $1 ($1 + $0 remainder). Thus, no matter where the tip was between $0 and $9, the Dasher would be paid the same ($10)-the only thing the consumer’s tip changed was DoorDash’s share of the worker’s pay. Indeed, in the overwhelming majority of circumstances, the consumer’s tip had no impact on the Dasher’s actual payment.”
Further, “Consumers using Door Dash were unlikely to know about or fully understand this payment model. While DoorDash did address the payment model in a separate FAQ webpage, its statements about the model were ambiguous, confusing, and misleading. Among other things, the FAQ webpage encouraged consumers to tip, but did not disclose that a consumer’s tip would, in the vast majority of circumstances, make no difference at all to a Dasher’s pay. In addition, the FAQ webpage was entirely separate and apart from the consumer’s checkout screenflow. As a result, a consumer placing an order would likely never encounter the FAQ.” Additionally, the way the screen presented the tip in incremental dollar amounts, would lead a consumer to believe these tips are directly benefitting the Dasher. It would be unreasonable for a consumer to search this much to find out where their tip is going.
After negative media attention in August, DoorDash announced it would change its tipping policy, effective in September. DoorDash did not compensate misled consumers or underpaid Dashers.
DC Attorney General Karl Racine said “DoorDash misled consumers, who reasonably believed that their tips would go to workers, not the company’s bottom line. We are filing suit to put a stop to this deceptive practice and secure monetary relief for those harmed by DoorDash’s actions.”
The complaint alleged that DoorDash violated the CPPA. The complaint stated, “[t]he CPPA is a remedial statute that is to be broadly construed. It establishes an enforceable right to truthful information from merchants about consumer goods and services that are or would be purchased, leased, or received in the District of Columbia… DoorDash’s deceptive payment model constituted a deceptive and unfair trade practice that violated D.C. Code§ 28-3904.”
DC has sought relief from DoorDash’s deceptive trade practices from July 2017 to September 2019.
