Karl Racine, District of Columbia Attorney General, sent a cease and desist letter to DoorDash this week to compel it to vacate its plan to charge restaurants in its premium DashPass program a higher commission fee, noting the plan would violate the District’s May emergency legislation that capped third-party delivery fees at 15% during the COVID-19 pandemic. Delivery companies like DoorDash and UberEats typically charge around a 30% delivery fee. The cap,which has also been adopted in places like Seattle, San Francisco and New York, is designed to allow restaurants to retain more money when their on-site business is reduced as a result of the pandemic.
According to DoorDash, DashPass is “a subscription service that offers unlimited deliveries from thousands of restaurants with $0 delivery fee on eligible orders.” Restaurants purportedly pay to be in the program for more exposure to premium DashPass customers. DoorDash allegedly informed several D.C. restaurants that due to the cap, the rates that they were paying to participate in the DashPass program were lower than their original contractual rates and would subsequently increase. According to Washington City Paper, DoorDash stated, “The regulation is only applicable to Classic orders and does not apply to the DashPass program, which is an optional, premium offering and separate from DoorDash’s core services … Effective Wednesday, December 9th, we will begin charging DashPass orders at the contractual rate in your original agreement with DoorDash.” However, since then DoorDash has stated, “We recognize that there has been confusion as a result of our response to the unintended consequences of the pricing regulations in Washington, D.C. We look forward to engaging with local policymakers to increase understanding of the impact pricing regulations have, and solutions that better serve customers, Dashers, and restaurants.”
Reportedly, the letter sent to DoorDash informed the company that the 30 percent commission violates the 15 percent cap enacted earlier in the year. Consequently, DoorDash has decided not to raise the commissions, specifically stating that DoorDash has “decided not to charge DC restaurants their contractual DashPass rate at this time. Moreover, the emergency legislation is set to end once the pandemic has ended.
This is not the first time the D.C. Attorney General has come into conflict with DoorDash or its policies. Previously, AG Racine sued DoorDash in November 2019 for violating the Consumer Protection Procedures Act regarding the company’s tipping policy. Last month, AG Racine announced that his office reached a $2.5 million settlement with DoorDash over the lawsuit and policy.
