The complaint points to a since-changed Instacart policy in place from September 2016 until April 2018 under which, in addition to a delivery fee, the company charged its consumers a default 10% “service” fee that could be increased, decreased or waived.
“To a reasonable consumer, this service fee looked like a tip,” according to the complaint, released by the Office of the Attorney General Thursday.
“Instacart tricked District consumers into believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” said Attorney General Racine in a statement.
In a statement to CNN Business, Instacart said that “customer transparency is incredibly important” to the company and that “we clearly indicate that service fees go towards our operations.”
“We believe the accusations made in this complaint are without merit. We’re disappointed with today’s action by D.C. Attorney General Racine’s office and we welcome the opportunity to continue an open dialogue on these matters,” the statement read.
The lawsuit also alleges that Instacart “failed to collect” District sales tax on the service and delivery fees during the entire time it transacted business in the District.
In his statement, Racine said: “Instacart used these deceptive fees to cover its operating costs while simultaneously failing to pay D.C. sales taxes. We filed suit to force Instacart to honor its legal obligations, pay D.C. the taxes it owes, and return millions of dollars to District consumers the company deceived.”