.Instacart must pay DC $2.5M after pocketing workers' tips
The settlement stems from a 2020 lawsuit filed by D.C. Attorney General Karl Racine that alleged the company misled consumers to believe the app’s service fees were going directly to delivery workers to increase their wages. As a result, Instacart will be required to pay $1.8 million in legal fees, as well as another $739,057 for refusing to pay sales taxes required under district law.“D.C. consumers expect their tips to go to workers — not the c-suite,” Racine said.
Beginning in 2016, Instacart changed its user interface to include an adjustable service fee on each purchase that “led consumers to believe” they were “tips that would increase worker pay.” Instead, the additional charge was collected by Instacart to subsidize operating expenses, according to the attorney general.
The $1.8 million settlement with the D.C. Attorney General’s Office will go toward resolving consumer protection claims, providing restitution to affected workers, and covering litigation costs. Instacart will also be required to update its app to ensure all tips go directly to workers and that the app “no longer displays fees or tips on its platform in a misleading manner.”
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