The Competition Bureau has launched legal action against DoorDash for allegedly using deceptive "drip pricing" tactics on its delivery platform — a move that could impact millions of Canadians who've used the app in recent years.
The Bureau says its investigation into the food delivery app found that DoorDash customers were shown lower prices upfront, only to be hit with a bunch of extra fees at the checkout screen.
The country's competition watchdog says this pricing model has been in place for "close to a decade" and has resulted in almost $1 billion in hidden charges to consumers.
The Bureau claims DoorDash has been advertising food delivery prices that people can't actually get without also shelling out for a range of mandatory fees — including "service fees, delivery fees, expanded range fees, small order fees and regulatory response fees."
The lawsuit, filed on Monday with the Competition Tribunal, alleges that these added charges weren't clearly disclosed at the start of the ordering process, making the initial prices look cheaper than they really were.
This kind of pricing scheme — where the total cost creeps up at the final stages of checkout — is known as drip pricing, and it's explicitly banned under Canada's Competition Act (with the only exception being any government-imposed taxes).
On top of that, the Bureau is accusing DoorDash of making some of these fees look like taxes when, "in reality, they are charges imposed at DoorDash's discretion."
The agency is now asking the Tribunal to order DoorDash to stop the allegedly misleading price advertising, stop presenting company-imposed fees as taxes, pay a financial penalty and issue compensation to affected customers.
"Parliament has made it clear that businesses must not engage in drip pricing by advertising unattainable prices and then adding mandatory fees," said Competition Commissioner Matthew Boswell in a statement Monday.
"The Competition Bureau has been fighting against this misleading practice for years. Our litigation against DoorDash is another example of our efforts to ensure consumers are not misled and can trust the prices they see online."
In a statement on Monday, DoorDash responded to the allegations, calling the Bureau's case misleading and unfair.
"Let us be clear — DoorDash does not hide fees from consumers or mislead consumers in any way," the company said, adding that all fees "are always disclosed to consumers throughout the ordering process."
DoorDash also argued that it has made changes to its checkout process as rules have evolved and called the Bureau's case "an overly punitive attempt to make an example of an industry leader in local commerce."
This is just the latest in a string of suits against big companies for alleged drip pricing and deceptive marketing practices.
Just last year, Cineplex was fined nearly $39 million after the Competition Tribunal found the movie theatre giant had misled customers by adding hidden online booking fees at checkout.
The Bureau also has ongoing suits against Canada's Wonderland, Rogers, Amazon and The Brick for various alleged forms of deceptive marketing.
Meanwhile, DoorDash isn't the only delivery app in the hot seat — class-action lawsuits have also been filed against competitors like Uber Eats and Instacart over similar accusations of misleading service fees and drip pricing.
For DoorDash users, the outcome of this case could be big — especially if the Tribunal orders refunds. But for now, the allegations haven't been proven in court, and the case is ongoing.
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