It is one of the larger penalties against a food delivery service. | Photo: Shutterstock
Delivery service DoorDash will pay $18 million to settle a lawsuit from the city of Chicago that alleged the company used deceptive business practices.
The 2021 lawsuit claimed that DoorDash listed restaurants on its app without their consent, misled customers about the costs of its service, charged a misleadingly named “Chicago fee,” and failed to disclose that menu prices on DoorDash could be higher than those in the restaurant itself.
It also alleged that DoorDash led customers to believe their tips went directly to drivers, when they were actually being put toward drivers’ base pay.
In a statement, DoorDash said that it discontinued these practices years ago and that the settlement is not an admission of wrongdoing.
Chicago filed similar lawsuits against delivery apps Uber and Grubhub. Uber settled in December 2022 for $10 million; Grubhub’s case is ongoing.
DoorDash also settled with the Illinois Attorney General for $11.25 million in a lawsuit over the tipping issue last year.
In this latest settlement, DoorDash agreed to pay the following:
- $3.25 million to restaurants that were listed on its app without consent and are not currently listed.
- $5.8 million in delivery commissions and marketing credits to eligible restaurants that are currently listed on DoorDash. Restaurants that were listed without consent, but later joined, will get additional credits.
- $4 million in food delivery credits for eligible consumers.
- $500,000 to couriers who were delivering food as of September 2019, when DoorDash ended its practice of using tips to subsidize driver pay.
- $4.5 million to the city of Chicago to cover the costs and fees of the lawsuit.
Eligible restaurants and consumers can expect to receive more information from DoorDash about compensation.
It is one of the larger penalties levied against a food delivery service. Last year, Grubhub agreed to pay $25 million to settle an FTC lawsuit over hidden fees.
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