Competition Bureau sues DoorDash for allegedly misleading customers over fees
Canada's competition watchdog is suing DoorDash Inc. and its Canadian subsidiary, accusing it of marketing its online delivery services at a lower price than what consumers actually wind up paying.
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The Competition Bureau alleged Monday that an investigation found DoorDash customers were unable to purchase food and other items at prices advertised on the food delivery company's websites and mobile apps because of mandatory fees added at checkout.
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The extra charges range from service and delivery fees to amounts sought for couriering things a further distance, placing smaller orders or making purchases in B.C., where DoorDash has to comply with minimum wage regulations for gig workers.
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The bureau alleged the charges were sometimes framed as if they were taxes, when in reality, they are charges imposed at DoorDash's discretion.
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The fees resulted in customers paying higher prices than advertised and amounted to a deceptive practice known as drip pricing, which the bureau alleges DoorDash may have used for close to a decade to make nearly from $1 billion from mandatory fees.
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The bureau wants the company to stop the practice, cease portraying fees as taxes, pay a penalty and issue restitution to affected consumers.
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DoorDash is pushing back on the requests, saying 'it does not hide fees from consumers or mislead them in any way.'
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'This application is a misguided and excessive attempt to target one of Canada's leading local commerce platforms,' DoorDash spokesperson Trent Hodson said in a statement to The Canadian Press.
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'It unfairly singles out DoorDash, and we intend to vigorously defend ourselves against these claims.'
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The Competition Bureau has been more aggressive in its fight against drip pricing since the Competition Act was amended in June 2022 to more clearly distinguish the practice as harmful, giving regulators more room to pursue companies who engage in such activity.
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The bureau accused Cineplex Inc. of drip pricing in May 2023, eventually winning a $38.9-million fine against the movie theatre giant, which is contesting the decision from the Competition Tribunal.
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Other recent Competition Bureau targets for drip pricing have included SiriusXM Canada, Discount Car & Truck Rentals Ltd. and TicketNetwork.
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Its Door Dash court filing shows it is going after the business for making 'false or misleading representations' because 'when consumers go online to order, they expect these services to deliver not just food, but also honest pricing.'
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'Consumers expect that the price they see advertised will match what they ultimately pay,' the bureau's application said.
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