The Competition Bureau alleges DoorDash mislead customers with deceptive pricing and presented fees as taxes.Andrew Kelly/Reuters
The Competition Bureau is taking legal action against DoorDash Inc. DASH-Q and its Canadian subsidiary, alleging the company promotes their online delivery services at a lower price than what consumers actually have to pay.
The bureau said Monday that it had launched an investigation, finding that consumers could not purchase food and other items at the advertised price on DoorDash websites and apps owing to additional mandatory fees at checkout.
This practice is what the bureau refers to as drip pricing and “is deceptive because consumers are not presented with an attainable price upfront,” it said in a news release.
The bureau alleges that certain fees presented on DoorDash platforms appear to be taxes, but are instead charges imposed at the company’s discretion.
The bureau filed its application against DoorDash with the Competition Tribunal, calling for the company to pay a penalty, end deceptive price and discount advertising, stop portraying fees as taxes, and issue a restitution to affected consumers who purchased items through DoorDash’s platform.
Trent Hodson, communications lead for DoorDash Canada, told The Globe and Mail in an e-mailed statement that transparency is a “top priority” for the company and denied the allegations of misleading customers.
The bureau’s statement notes that DoorDash charges consumers numerous mandatory fees to deliver orders made online, including service fees, delivery fees, expanded range fees, small order fees and regulatory response fees.
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DoorDash has engaged in the alleged conduct of drip pricing for close to a decade, acquiring nearly $1-billion in mandatory fees from customers, according to the bureau.
In one case, the bureau said, a customer in Quebec tried to order an item from a sushi shop through DoorDash that was originally advertised as $6.25, but could not purchase the item without paying the obligatory fees, including a $1.99 delivery fee and service fee ranging from $1.99 to $3.99. These charges appear to be in addition to tax fees.
Throughout the order process, these types of fees are often hidden or are not in close proximity to the initially stated prices. The bureau uses this example to establish their argument that DoorDash omits or hides obligatory fees from the price representation until checkout, rendering the advertised price of $6.25 unattainable.
“The Competition Bureau has been fighting against this misleading practice for years,” Commissioner Matthew Boswell said in the release. “Our litigation against DoorDash is another example of our efforts to ensure consumers are not misled and can trust the prices they see online.”
Mr. Hodson of DoorDash Canada said in his statement that “All fees on DoorDash, which support the high-quality operations of our platform, are clearly labeled and disclosed to consumers throughout the ordering process – including a final review before payment.
“To be crystal clear, DoorDash does not hide fees from consumers or mislead them in any way. [The Competition Bureau’s] application is a misguided and excessive attempt to target one of Canada’s leading local commerce platforms. It unfairly singles out DoorDash, and we intend to vigorously defend ourselves against these claims.”
This is not the first time the bureau has sought legal action against a company alleging misleading prices. Last September, the bureau won a deceptive marketing case against Cineplex Inc. for engaging in drip pricing by adding a mandatory $1.50 online booking fee and ordered the company to pay a financial penalty of more than $38.9-million.
Last June, the bureau reached an agreement with SiriusXM Canada to address concerns over a mandatory additional fee on subscription plans that increased the monthly cost by 10 to 20 per cent. Currently, the bureau is pursuing legal action against Canada’s Wonderland for alleged false or misleading price claims.