DoorDash agrees to $18M settlement with Chicago over deceptive hidden fees

DoorDash settlement overview:

• Who: The city of Chicago has reached an $18 million settlement with DoorDash.
• Why: The settlement resolves claims that the food delivery company used deceptive business practices during the COVID-19 pandemic.
• Where: The DoorDash class action lawsuit was filed in Illinois federal court.

DoorDash has agreed to pay $18 million to settle a Chicago class action lawsuit alleging it used deceptive business practices during the COVID-19 pandemic.

Chicago Mayor Brandon Johnson announced the DoorDash settlement Nov. 14, saying the food delivery company used deceptive business practices to gain market share during the pandemic when government shutdown orders restricted dining and customer demand for deliveries skyrocketed.

Chicago’s DoorDash class action lawsuit accused the company of misleading diners by charging “service fees,” “small order fees” and a $1.50 “Chicago” fee along with delivery fees while hiding them from consumers by grouping them with taxes, suggesting they were imposed by the government.

DoorDash also allegedly failed to disclose that the food prices featured on its app might differ from those found on the restaurant’s own website or in-store menu, and offered discounts that only applied if diners met a minimum order amount.

DoorDash will pay Chicago, restaurants, customers, drivers and city government

According to terms of the proposed settlement, DoorDash will pay the city $4.5 million to recover legal fees and costs in prosecuting its case against DoorDash..

The $18 million DoorDash settlement will include $3.25 million to restaurants that were listed on DoorDash without their consent and are still not listed on the app today. 

DoorDash will provide instructions to those unaffiliated restaurants on how to enroll for settlement payment and in the future will not list those eateries without consent.

Eligible restaurants will receive $5.8 million in delivery commissions and marketing credits, while eligible restaurants that were initially listed on the app without consent — but have since joined — will receive an additional share of those credits, the city said.

Qualified Chicago customers with active DoorDash accounts will receive $4 million in DoorDash credits, which can be applied to food delivery orders. DoorDash will automatically make those credits available to eligible users starting January 28, the city said.

Drivers who were delivering DoorDash orders in Chicago as of September 2019 — the final month DoorDash’s practice of using tips to subsidize driver pay was in effect — will receive $500,000.

DoorDash is currently facing a number of lawsuits. A class action filed in Maryland accuses the company of charging unlawful fees, while another lawsuit alleges DoorDash and Apple Pay charged users for DashPass subscriptions without their consent and made the subscription difficult to cancel.

What do you think of the terms of the DoorDash settlement? Tell us in the comments!

The city is represented by Rebecca Hirsch and Stephen J. Kane of the City of Chicago Department of Law’s Affirmative Litigation Division, and Brian E. Bowcut of Cohen Milstein Sellers & Toll PLLC.

The DoorDash class action lawsuit is City of Chicago v. DoorDash Inc. et al., Case No. 1:21-cv-05162, in the U.S. District Court for the Northern District of Illinois.

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