Canada suing DoorDash over food delivery app's prices

The Competition Bureau is suing DoorDash, alleging that the company has advertised misleading prices and discounts in Canada.

Canada's antitrust watchdog announced on Monday that it is taking legal action against DoorDash Inc. and its subsidiary, DoorDash Technologies Canada Inc., for marketing their online food delivery service at a lower price than what consumers ultimately pay.

An investigation by the Bureau found that DoorDash customers in Canada were unable to buy food and other items at the advertised price on the company's websites and mobile apps due to the addition of mandatory checkout fees, a practice commonly known as drip pricing.

"The Competition Bureau has been fighting against this misleading practice for years. Our litigation against DoorDash is another example of our efforts to ensure consumers are not misled and can trust the prices they see online," reads a statement from Matthew Boswell, commissioner of Competition. "We urge all businesses to review their pricing practices and make sure they comply with the law."

The federal agency says the additional mandatory fees on DoorDash include service fees, delivery fees, expanded range fees, small order fees and regulatory response fees. All of these fees allegedly result in customers paying higher prices or receiving lower discounts than advertised.

It claims that DoorDash has been engaging in this practice in Canada for close to a decade, acquiring nearly $1 billion in mandatory fees from consumers.

The Bureau also alleges that the way certain fees are shown on the delivery service's platform gives the impression that they are taxes, when, in reality, they are charges "imposed at DoorDash's discretion."

Canada's antitrust watchdog filed an application with the Competition Tribunal, seeking that DoorDash:

• Stop the deceptive price and discount advertising
• Stop portraying fees as taxes
• Pay a penalty
• Issue restitution to affected consumers who purchased food and other items through DoorDash's platform
• A DoorDash spokesperson explained in an email that transparency with its customers is a top priority.

"All fees on DoorDash, which support the high-quality operations of our platform, are clearly labelled and disclosed to consumers throughout the ordering process, including a final review before payment," they stated. "To be crystal clear, DoorDash does not hide fees from consumers or mislead them in any way."

"This application is a misguided and excessive attempt to target one of Canada's leading local commerce platforms," they added. "It unfairly singles out DoorDash, and we intend to vigorously defend ourselves against these claims."

According to the company, when Canadian law was amended to explicitly prohibit drip pricing, it responded proactively by adding unavoidable disclosures to the top of every store page on its platform, noting "Service Fees Apply" or "Other Fees Apply."

DoorDash isn't the only delivery service in Canada that has been sued over drip pricing.

In February, a class-action lawsuit was filed against Instacart for allegedly failing to disclose all-in pricing of purchases made by customers.