Massive DoorDash Class Action Alleges Consumers Scammed by ‘Predatory’ Pricing

A proposed class action alleges the onslaught of fees levied by DoorDash on food orders has bilked millions of consumers out of billions of dollars each year as the company exploits struggling restaurants and a largely immigrant workforce.

The sprawling 81-page lawsuit charges that although the mobile food-delivery platform has in its decade of existence engaged in a slew of “heavy-handed,” predatory tactics toward its contractors and merchants, the company has ultimately taken advantage of consumers, including children, who use its platform by charging “misleading, premium, and hidden fees.”

In particular, the complaint alleges DoorDash, which boasts roughly 32 million users, has misrepresented its delivery fees, express or priority delivery fees and “expanded range” delivery fees such that consumers have no idea that the platform keeps every one of these revenue-driving fees for itself. According to the suit, the slew of fees assessed by DoorDash, unbeknownst to the public and despite the company’s uniform representations, “have nothing to do with deliveries” and are never passed on to delivery drivers, known as “Dashers.”

Underlying the litany of fees consumers know about are allegedly “hidden” marketing fees on promotional items and commission fees that, despite what DoorDash represents to restaurants, are ultimately paid by consumers, the case adds.

“DoorDash is committing a massive fraud,” the lawsuit scathes, accusing the company of effectively depriving consumers of their money and the opportunity to make an informed decision about which technology to use when ordering food.

The filing goes on to allege that DoorDash directly and unfairly targets minors by advertising on TV and social media to encourage young people to use its service. In practice, DoorDash has neither age verification procedures nor parental controls, making it so easy for a child to use the platform that a two-year-old reportedly ordered 31 burgers through the app, the lawsuit says.

Lastly, the case contests that DoorDash “believes it is effectively bulletproof” against consumer disputes thanks to its terms and conditions, which the complaint calls “the foundation of its illegal pricing practices.” These terms and conditions, which allegedly obscure DoorDash’s predatory pricing model under a veil of dense legalese, altogether strip consumers of any protections against misconduct, the suit says.

“In effect, DoorDash uses its Terms and Conditions as a shield and sword to carry out its deception,” the case summarizes, noting that a consumer’s only recourse against the platform is to “sue in secret arbitration, on an individual basis,” while handcuffed by a six-month statute of limitations.

The proposed class action seeks monetary damages of no less than $1 billion on behalf of consumers who “fell prey to DoorDash’s illegal pricing scheme.”

Suit alleges “hidden,” “misleading” DoorDash fees are backbone of fraudulent pricing scheme

As the lawsuit tells it, consumers must contend with pricing practices from DoorDash that are “unsettling” to say the least, as the bevy of fees the platform charges serve as the company’s primary revenue driver.

For one, DoorDash levies on some orders a “city” or regulatory response fee that consumers are led to believe is imposed by the local government. In truth, DoorDash assesses this fee “in part to circumvent limitations on food commissions in certain areas,” such as pandemic-related caps on delivery fees, the lawsuit claims.

In another instance, DoorDash, despite “[disavowing] that it provides any delivery service whatsoever,” nevertheless charges a range of “deceptive and misleading” delivery fees that the company claims vary depending on a consumer and a restaurant’s location. Though the platform purports that these fees “help cover the cost associated with getting your order directly to you,” leading users to believe the charges will be passed along to Dashers, DoorDash pockets all delivery fees to offset the cost of operating its platform.

Per the case, the company manipulates these fees “at its whim” in order to induce consumers into ordering food at a low delivery cost while “raising fees in other areas,” the lawsuit charges.

“The Delivery Fee is nothing more than a deceitful sales gimmick that is part of a fraudulent bait-and-switch pricing model,” the filing alleges, claiming the delivery fees exist solely for DoorDash to sell subscriptions to its “DashPass” program, which affords a subscriber discounted delivery fees in exchange for a flat monthly fee.

Further still, although DoorDash claims to have no control over the “manner and means” of delivery routes, the company nevertheless charges an express or priority fee for delivering “direct to you,” the suit says. Dashers, however, are never informed that a consumer has paid extra for “priority” delivery, and as a result these purportedly “express” delivery orders take as long as a standard order to arrive on a customer’s doorstep, the suit says.

In addition, DoorDash further “manipulates” consumers by way of posting “estimated delivery windows.” The filing alleges that DoorDash uses an algorithm that advertises shorter delivery windows so as to mislead consumers into believing that their food will arrive sooner.

DoorDash also hits consumers with an “expanded range delivery” fee on orders “outside of [their] normal delivery area,” the filing says. In truth, however, DoorDash never creates a “normal delivery area” for each customer and instead creates such regions around restaurants based on their particular service plan with the platform, i.e., how much they pay DoorDash, according to the case.

And DoorDash will send certain consumers’ orders (like low-cost McDonald’s orders) to restaurant locations further from the consumer’s home (bypassing closer locations), triggering the expanded range fee and ‘justifying’ increased delivery costs.”

DoorDash allegedly applies these expanded-range fees “disingenuously” to customers with DashPass accounts. If a DashPass account and a standard account place the same order at the same time from the same restaurant for delivery to the same home, DoorDash will occasionally charge the DashPass account—but not the standard account—an expanded-range fee, the filing says.

“Upon information and belief, DoorDash charges DashPass accounts the expanded range delivery fee to subsidize lost revenues from discounted fees under the DashPass program,” the suit claims.

Broadly, DoorDash users, either during sign-up or otherwise, are not afforded the benefit of a clear explanation of the platform’s fees, the details of which can be found “in oddly placed informational tabs” designed to discourage users from looking any further, the complaint relays. To get the full picture of DoorDash’s “unquestionably deceitful, deceptive, and misleading” fee structure, a consumer must essentially piece together statements from the company’s legal terms with “other admissions buried in various placed in its website,” the filing says.

Case claims DoorDash saddles consumers with hidden marketing, commissions fees

The complaint goes on to allege that DoorDash advertises menu item promotions that include hidden fees that the customer, unbeknownst to them, ends up paying. For this particular “scheme,” the lawsuit says, DoorDash explains to restaurants—but not to consumers—that menu item promotions are meant to help attract customers and can be targeted to certain users based on several criteria. Importantly, DoorDash tells restaurants that they’ll pay for the item or discount offered to customers in addition to a $0.99 “marketing fee,” the case states.

In reality, however, it’s the consumer, not the restaurant, who ends up paying extra since this undisclosed “marketing fee” is ultimately wrapped into the menu price for a promotional item, a price “that is charged to and paid by consumers only,” the filing claims.

“Consumers pay for DoorDash’s undisclosed $0.99 Marketing Fee on promotional items without ever knowing the hidden charge was included as part of a ‘promotion,’” the suit summarizes.

If that weren’t enough, embedded into every DoorDash order are undisclosed “commissions” that, according to the lawsuit, “are truly nothing more than another hidden fee that consumers pay.” Per the suit, these commissions range from 20 percent to 29 percent on delivery orders and eight percent to 10 percent on pickup orders.

Though DoorDash, again, explains to restaurants how all this works, consumers are ultimately left holding the bag given that the “commission” supposedly covers an array of “contrived delivery and other costs,” including hidden credit card processing surcharges on customer transactions, the suit claims.

“Regardless [of] how DoorDash frames the issue, DoorDash charges a Commission Fee on each order that consumers pay and DoorDash collects and retains the payment without ever informing the consumer, including payments for credit card surcharges […],” the lawsuit reads. “This approach represents the essence of deception and fraud.”

Terms and conditions not as ironclad as DoorDash believes, case contends

The case minces no words in alleging that DoorDash’s terms and conditions “transform recognized liability avoidance into illegal liability evasion.” Per the lawsuit, the terms and conditions force consumers to waive their right to trial and prohibit them from proceeding with disputes as a class while drastically slashing the applicable time limit on claims from “years to mere months.” Moreover, the right to certain kinds of relief—namely the kind that could prohibit DoorDash from engaging in certain practices—is wholly restricted by the company’s terms and conditions, the case argues.

Ultimately, consumers looking to use DoorDash have no choice but to indemnify the company entirely for all liability in every respect, the suit relays, claiming Dashers and restaurants are hampered by similarly restrictive contracts with the platform.

However, although DoorDash believes based on a “fundamentally flawed position” that it has crafted “the perfect predatory pricing scheme,” the lawsuit says, its terms and conditions are unenforceable given consumers are never told that their use of the platform amounts to a binding contract, never affirmatively agree to the terms, or are minors who lack the capacity to enter into a binding contract without parental consent.

“Absent an enforceable contract, DoorDash must answer for its actions before this Court with respect to its delivery fee, priority delivery fee, expanded range delivery fee, hidden marketing fee, and hidden commission fee,” the lawsuit asserts.

Lawsuit: DoorDash has a “history of unsavory business practices” against drivers, restaurants

DoorDash’s roughly 10 years of existence is replete with “predatory tactics” toward all parties who use the platform, the case alleges. For instance, in 2020, DoorDash ended up settling for $2.5 million allegations that it illegally retained Dashers’ tips in order to pad its bottom line, the filing notes. Although DoorDash now purports to pay Dashers the entire tip amount they’re owed, the lawsuit claims the platform holds onto drivers’ daily pay on each order “for a week.”

If a DoorDash driver wants to receive their compensation on the same day it’s earned, they must pay the company a “Fast Pay” fee to release the funds, the suit says, alleging essentially that no matter whether a driver is paid daily or a week after they’ve earned their wages, DoorDash stands to make money in either fees or interest. The company, which allegedly targets immigrants to work as drivers, knows that many Dashers have no choice but to pay the Fast Pay fee given that they “need money desperately,” the complaint shares.

Restaurants who work with DoorDash share an experience similar to that of Dashers as the platform holds a restaurant’s earnings on each order for a week unless the merchant either pays a fee to receive the money earlier or enrolls in a premium service to receive those funds “without charge,” the case explains.

Ultimately, DoorDash’s pay structure cuts restaurants’ profit margins on food orders, forcing them to pass on hidden fees to customers in the form of increased prices, the case summarizes.

In effect, DoorDash earns millions, if not more, strong-arming drivers and merchants (and forcing them to capitulate to DoorDash’s questionable billing tactics), while consumers bear the unsettling burden of the increased cost from the hidden fees.”

Who’s covered by the lawsuit?

The case looks to represent everyone in the United States who, within the relevant statute of limitations period, established a DoorDash account and placed an order using either the DoorDash app or DoorDash.com and paid a delivery fee, express (or priority) delivery fee and/or an extended range delivery fee and/or who bought a promotional item that included a hidden marketing fee and/or who bought a menu item that included a hidden commission fee, and/or anyone who paid any combination of these fees.

I use DoorDash. How do I get involved?

When a proposed class action is initially filed, there’s usually nothing you need to do to join or add your name to the case. It’s only if and when a lawsuit settles that the people covered by the allegations—called class members—need to act, which typically involves filling out and filing a claim form online or by mail. (If you’re covered by a particular settlement, it’s possible that you’ll receive direct notice about it.)

However, we may have a long way to go. Cases like this can take months or even years to pass through the legal process.

If you use or work for (or with) DoorDash, or simply want to stay in the loop on class action lawsuit and settlement news, sign up for ClassAction.org’s free weekly newsletter.