Illinois, DoorDash agree to $11.25 million settlement over misused tips

A fish An $11 million settlement was made between Illinois Attorney General Kwame Raoul and the food delivery service DoorDash.

The $11.25 million LOCATION which was agreed on November 8 is still awaiting court approval. The settlement addresses the allegation that DoorDash violated Section 2 of the Illinois Consumer Fraud and Deceptive Trade Practices Act by providing tips to consumers and how they would affect drivers’ earnings.

The settlement includes exemptions for nearly 80,000 Illinois drivers and requires DoorDash to maintain a payment model that does not use consumer tips as a factor in calculating its own contributions to driver pay.

The Attorney General’s Office argues that instead of allowing drivers to keep tips made through deliveries, as well as the app’s guaranteed payment, DoorDash used customer tips for the guaranteed payment promised in driver deliveries. The practice, which ended before COVID-19, saw customer tips rarely affect a driver’s actual overall pay while reducing DoorDash’s contribution.

“DoorDash has encouraged customers to tip as much as possible, indicating that all of their tip will go to the workers,” Raoul said in a statement. “Instead, DoorDash used tips to reduce the amount the company paid workers. By providing tips for driver pay, DoorDash could get away with contributing as little as $1 to a worker’s pay and allow tips to make up the rest. This agreement ensures that customer advice goes where it was meant to go: in the pockets of delivery drivers.”

The business model took place between July 2017 and September 2019. Under the new agreement, the company will be required to make clear disclosures to both workers and customers about its pay model.

The Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) is a comprehensive piece of legislation designed to protect consumers, borrowers, and businesses against fraud, unfair competition, and deceptive trade or business practices.

Claire Grant writes about business, growth and development and other news topics for The State Journal-Register. She can be reached at [email protected]; and on X (formerly known as Twitter): @Claire_Granted