The Competition Bureau said on Monday that it is suing the online food delivery company DoorDash and its Canadian subsidiary for allegedly misleading consumers by advertising its services at a lower price than what customers actually end up paying.
“A Bureau investigation found that consumers were unable to purchase food and other items at the advertised price on DoorDash’s websites and mobile applications due to the addition of mandatory fees at checkout,” said the readout from the agency.
“This practice is commonly known as drip pricing and is deceptive because consumers are not presented with an attainable price upfront.”
The bureau filed an application with the Competition Tribunal, which handles cases related to Canada’s competition laws.
It’s seeking an outcome that would have DoorDash pay a penalty and compensate affected customers, in addition to ending what it refers to as “deceptive” price and discount advertising and the portrayal of fees as taxes.
Spokesperson Parker Dorrough told CBC News in an emailed statement that transparency is a “top priority” at the company and denied that DoorDash hides fees from consumers or misleads them.
“All fees on DoorDash, which support the high-quality operations of our platform, are clearly labeled and disclosed to consumers throughout the ordering process — including a final review before payment,” the statement read.
“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. It unfairly singles out DoorDash, and we intend to vigorously defend ourselves against these claims.”
Travel booking industry ‘good candidates’ for similar cases
Delivery services are a “bigger and bigger piece” of how Canadians interact with the economy, said Keldon Bester, the executive director of the Canadian Anti-Monopoly Project.
“It’s important that we have fair competition and transparent pricing in this area,” he says, noting that other “middle-men” businesses — like travel booking and other delivery services — are “good candidates” for these kinds of investigations.
He described drip pricing as a practice in which the advertised price of a product or service isn’t actually the full amount, with a company hiding or delaying fees until later on in the purchase process to distort the actual price.
As for why the Competition Bureau would target DoorDash but not its rivals, Bester said that competition laws are often used to make an example of one company to deter the rest of the market from engaging in similar behaviour.
The goal is that if the bureau is successful, “other companies with similar practices… they’ll see this and change their ways or face consequences in the future.”
