Delivery services under legal scrutiny for alleged 'drip pricing'
The practice known as 'drip pricing' is front and centre again in an action by the federal Competition Bureau against DoorDash and in a proposed class-action lawsuit brought by a Toronto law firm against Uber Eats.
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Drip pricing generally involves enticing customers by advertising low prices, but charging extra mandatory fees, usually when they are checking out.
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It continues to come under fire because 'disclosure around pricing and fees in various consumer transactions is, at times, less than thorough and transparent,' says Mike Robb, partner with London, Ontario-based law firm, Siskinds.
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Canada's competition watchdog is hauling DoorDash Inc. and its Canadian subsidiary before the Competition Tribunal, accusing them of portraying the online cost of delivery as lower than the price consumers ultimately pay.
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The Competition Bureau says it investigated and is alleging DoorDash customers paid more, due to mandatory fees, added during checkout.
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The extra fees, the bureau says, include charges such as extra amounts for delivering items a further distance and for placing smaller orders. The bureau alleges the discretionary charges were sometimes framed as taxes.
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The bureau is asking the Competition Tribunal to order the company to stop the practice, cease portraying fees as taxes, pay a penalty and issue restitution to affected consumers.
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Still, the bureau is standing its ground. 'Our litigation against DoorDash is another example of our efforts to ensure consumers are not misled and can trust the prices they see online. We urge all businesses to review their pricing practices and make sure they comply with the law,' said Matthew Boswell, commissioner of competition in a press release.
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