- DC Attorney General Karl Racine is suing food delivery company DoorDash, CNBC first reported.
- In the suit, Racine alleges that DoorDash engaged in misleading practices and kept tips intended for drivers.
- He alleges that during the two years the tipping policy was in place, DC consumers effectively subsidized DoorDash with millions of dollars intended as tips.
- DoorDash changed its tipping policy in August 2019 after backlash from the delivery workers, the press, and the public.
- "We strongly disagree with and are disappointed by the action taken today," a spokesperson for DoorDash said in a statement.
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The DC Attorney General Karl Racine is suing DoorDash over what he calls misleading tipping practices, CNBC first reported Tuesday.
Between July 2017 and September 2019, the Attorney General's office alleges that DoorDash kept millions of dollars in tips that customers expected to go directly to delivery workers.
The company's policy at the time meant that, in some cases where the order total plus tips was less than the guaranteed minimum for workers, the tip was applied to the minimum payment, with DoorDash keeping the difference.
This summer, the company came under fire as media outlets reported on the tipping practice, which many customers were not aware of. Facing complaints from delivery workers and the public, DoorDash then announced a new policy.
"We strongly disagree with and are disappointed by the action taken today," a spokesperson for DoorDash told Business Insider in a statement. "Transparency is of paramount importance, which is why we publicly disclosed how our previous pay model worked in communications specifically created for Dashers, consumers, and the general public starting in 2017. We've also worked with an independent third party to verify that we have always paid 100% of tips to Dashers. We believe the assertions made in the complaint are without merit and we look forward to responding to them through the legal process."
DoorDash is a VC-backed startup that's raised over $2 billion since it was founded in 2013. It was most recently valued at over $13 billion.