Canada’s Competition Bureau is suing online delivery platform DoorDash for what it claims is misleading pricing.
The federal agency alleges that DoorDash in Canada has, for nearly a decade, engaged in “drip pricing” – advertising certain prices for food and other items on its website and app but adding mandatory fees at checkout that push the cost way up.
DoorDash denies the claim and says it does not hide fees or mislead consumers.
DoorDash has a number of possible fees that might be added when customers check out: service fees, delivery fees, expanded range fees, small order fees and regulatory response fees. This, the bureau says, means that consumers end up paying higher prices or receiving lower discounts than those advertised, which has netted DoorDash nearly $1 billion in fees.
The bureau also alleges that DoorDash is misrepresenting certain fees as government-imposed taxes when they are actually discretionary charges.
DoorDash says the lawsuit “unfairly singles out” the service.
“Fees, which help us operate the platform and pay Dashers, are always disclosed to consumers throughout the ordering process – including a final review before they submit final payment for an order,” the company said in a statement posted on its website.
The bureau filed an application Tuesday with the Competition Tribunal seeking, among other things, for DoorDash to pay a penalty, issue restitution to affected customers and change the advertising practices in question.
The tribunal has the authority to make findings and issue remedial orders, and its decisions may be appealed to the Federal Court of Appeal.
Amendments to the Competition Act that came into force in June 2022 describe drip pricing as offering a product or service “at a price that is unattainable,” which the act calls a “false or misleading representation.”
DoorDash says it “proactively” adjusted to these changes by adding disclosures to the top of every store page on its platform that notes “Service Fees Apply” or “Other Fees Apply.”
“We will defend ourselves vigorously against these claims and look forward to resolving this matter,” the company said.
