Law Street Media

Uber Eats Receives Sales Tax Overcharge Complaint

A man recieves a food delivery order in a brown paper bag.

Bicycle delivery commuter with road bicycle delivering package to customer

A New York resident has sued Uber Technologies Inc. over a pricing practice by its third-party food delivery service, Uber Eats. The class action complaint asserts that Uber overcharges customers by calculating sales tax based on the price of ordered food items prior to applying a promotional discount.

The filing asserts that Uber “issues significant promotional offers to gain customers, or market share, based on the reasonable belief that once a customer begins to use its platform, this ‘stickiness’ will cause them to remain a user when the promotions eventually end.” The market Uber Eats competes in is very competitive, the complaint explains. However, the plaintiff contends, the trust clients bestow on Uber allows it to overcharge customers, “who would not even know how to discover or dispute this practice.”

The lawsuit distinguishes between manufacturer-issued promotions and store-issued promotions, explaining that when a customer uses a manufacturer’s coupon, “the purchaser pays sales tax on the full price of the item, not on the discounted price.” By contrast, when a customer uses a store-issued coupon, the seller receives a reduced amount because the seller is not reimbursed for the amount of the coupon. As such, the sales tax for store-issued coupons is calculated on the reduced price.

The complaint contends that Uber Eats’ coupons are akin to store-issued ones and thus, that the sales tax should be assessed after applying the discount. The complaint offers the example of a food order costing $30.23, for which New York sales tax costs $2.42 if assessed prior to the $20 discount, and $1.26 if after.

The complaint alleges that Uber benefits from these small overcharges given its high sales volume. The litigant seeks relief on behalf of a class of New York coupon users who were similarly overcharged and from breach of contract, conversion, unjust enrichment, and a claim for “[r]efunds or credits based on erroneous, illegal, or unconstitutional payment or collection of tax” under New York law.

The plaintiff is represented by Sheehan & Associates P.C.

Exit mobile version