Chicago reaches $18 million settlement with Doordash over deceptive practices
The City of Chicago reached an $18 million settlement with DoorDash over deceptive practices.
The city said the lawsuit stemmed from an investigation into third-party delivery companies. The city's complaint stated, "DoorDash violated the Chicago Municipal Code by listing restaurants on its platform without their consent."
The city also said the delivery service was not transparent with full costs to customers and "imposed a misleadingly named 'Chicago Fee' that was not a City-mandated charge." The lawsuit said menu prices were often increased on the app.
In a statement, Johnson said the settlement "demonstrates Chicago's commitment to standing up for workers and small businesses while maintaining a fair and honest marketplace."
According to the city, the settlement terms include:
- DoorDash will pay $3.25 million to restaurants that had been listed on DoorDash's platform without consent and are not currently on the platform.
- DoorDash will provide $5.8 million in delivery commission and marketing credits to eligible restaurants currently on the DoorDash platform
- DoorDash will provide $4 million in credits, which can be applied to food delivery orders, to eligible Chicago users with active accounts on the platform.
- DoorDash will pay $500,000 to drivers who were delivering food orders in Chicago as of September 2019, the last month that DoorDash's practice of using tips to subsidize driver pay was in effect
- DoorDash will pay $4.5 million to the City to cover the City's costs and fees in bringing the lawsuit.
DoorDash released the following statement in response to the settlement:
"We're pleased to have settled a years-old lawsuit with the City of Chicago. To be clear, this settlement isn't an admission of wrongdoing and the allegations in this lawsuit focus on business practices that no longer exist. We're glad to put this behind us. Our focus is where it belongs: delivering the best experience for merchants, customers, and Dashers in Chicago."
DoorDash also said the city's issues with the "dasher pay model" have been "resolved for more than six years." DoorDash also said issues like listing "non-partner restaurants" have also been resolved.