Competition Bureau Takes Legal Action Against DoorDash Over Fees

A DoorDash sign is posted on the door of a Dunkin' Donuts franchise in Methuen, Mass., on Feb. 27, 2023. Charles Krupa/AP Photo

The Competition Bureau is suing DoorDash for allegedly promoting “misleading” prices and discounts for its online delivery services. The Bureau found that the company’s services end up being more costly to consumers than it advertises.

Through investigation, the Bureau says it found mandatory fees at checkout that did not allow consumers to purchase food and other items at the price that DoorDash advertises on its websites and mobile applications, according to a June 9 news release from the Competition Bureau.

“This practice is commonly known as drip pricing and is deceptive because consumers are not presented with an attainable price upfront,” the release says. DoorDash has denied this allegation, which it calls “erroneous claims,” saying that its fees are not hidden and are disclosed to consumers.

On June 9, the Bureau filed an application with the Competition Tribunal that seeks for DoorDash to stop advertising “deceptive” prices and discounts, stop portraying fees as taxes, pay a penalty, and refund affected customers who purchased items through DoorDash, among other things.

The mandatory fees DoorDash charges to deliver orders that customers place online include service fees, delivery fees, expanded range fees, small order fees, and regulatory response fees, the Bureau says. These fees, which the Bureau says are not set out up front, result in consumers paying steeper prices or receiving lower discounts than the company advertised.

“​​The company has been engaging in the alleged conduct for close to a decade, acquiring nearly $1 billion in mandatory fees from consumers,” the Bureau says, also alleging that the DoorDash platform suggests that certain fees are taxes, while they are actually charges imposed by the company.

“Parliament has made it clear that businesses must not engage in drip pricing by advertising unattainable prices and then adding mandatory fees,” Commissioner of Competition Matthew Boswell said in a statement. “The Competition Bureau has been fighting against this misleading practice for years.”

In June 2022, amendments to Canada’s Competition Act came into force, which included recognizing drip pricing as a “harmful business practice” under the false or misleading representations provision of the act.

Making false or misleading representations can result in a corporation facing penalties of up to the greater of $10 million or “three times the value of the benefit derived from the deceptive conduct” under civil provisions, or up to 14 years of imprisonment with fines at the discretion of the court under criminal provisions.

“Our litigation against DoorDash is another example of our efforts to ensure consumers are not misled and can trust the prices they see online,” Boswell said. “We urge all businesses to review their pricing practices and make sure they comply with the law.”

DoorDash’s Response

DoorDash Inc., and its subsidiary DoorDash Technologies Canada Inc., run an online delivery service that connects consumers who wish to order food and other items to local restaurants, grocery stores, and convenience stores through its websites and mobile applications.

DoorDash made an announcement on June 9 “debunking” the Bureau’s claims that the company engages in drip pricing, saying, “The Canadian Competition Bureau got this wrong.”

“Let us be clear – DoorDash does not hide fees from consumers or mislead consumers in any way,” the company said.

The company said that its fees, which help the company pay drivers and operate its online platform, are “always disclosed to consumers throughout the ordering process – including a final review before they submit final payment for an order.”

DoorDash said that the company seeks to improve customer experience and has adjusted the checkout process as regulations have changed. It believes that the Bureau’s application is an “overly punitive attempt to make an example of an industry leader in local commerce.”

“We will defend ourselves vigorously against these claims and look forward to resolving this matter,” DoorDash said.