Doordash: Difference between revisions
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{{InfoboxCompany | {{InfoboxCompany | ||
| Name = Doordash | | Name = Doordash | ||
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*Using AI to falsely advertise what menu items look like | *Using AI to falsely advertise what menu items look like | ||
*Subsidizing Dashpass subscriptions by passing commission rates onto business's | *Subsidizing Dashpass subscriptions by passing commission rates onto business's | ||
*Multiple | *Multiple lawsuits due to unfair business practices | ||
==Incidents== | ==Incidents== | ||
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===Using BNPL services to target the financially challenged consumers=== | ===Using BNPL services to target the financially challenged consumers=== | ||
As of March 2025, Doordash has decided to partner up with Klarna for BNPL (Buy Now Pay Later) services.<ref>{{Cite web |last=Steinberg |first=Brooke |date=2025-03-24 |title=DoorDash now offering eat now, pay later payments through Klarna |url=https://nypost.com/2025/03/24/lifestyle/DoorDash-now-offering-eat-now-pay-later-payments-through-klarna/ |url-status=live |access-date=2025-04-04 |website=New York Post}}</ref><ref>{{Cite web |date=2025-03-20 |title=DoorDash Partners with Klarna to Offer US Customers Even More Convenience with Flexible Payments {{!}} DoorDash |url=https://about.doordash.com/en-us/news/doordash-partners-with-klarna |url-status=live |access-date=2025-05-14 |website=Doordash}}</ref> This partnership is aimed at the consumers that want food delivery but are currently unable to afford it. However, it's a deceptive practice that can further financially ruin consumers. While BNPL can defer payments interest free, it does charge late fees. Consumers that are already financially strapped for cash may find it difficult to repay these loans if they are not careful. This may boost Doordash's profits by taking advantage of consumers that are not financially savvy. | As of March 2025, Doordash has decided to partner up with Klarna for [[Buy Now Pay Later|BNPL (Buy Now Pay Later)]] services.<ref>{{Cite web |last=Steinberg |first=Brooke |date=2025-03-24 |title=DoorDash now offering eat now, pay later payments through Klarna |url=https://nypost.com/2025/03/24/lifestyle/DoorDash-now-offering-eat-now-pay-later-payments-through-klarna/ |url-status=live |access-date=2025-04-04 |website=New York Post}}</ref><ref>{{Cite web |date=2025-03-20 |title=DoorDash Partners with Klarna to Offer US Customers Even More Convenience with Flexible Payments {{!}} DoorDash |url=https://about.doordash.com/en-us/news/doordash-partners-with-klarna |url-status=live |access-date=2025-05-14 |website=Doordash}}</ref> This partnership is aimed at the consumers that want food delivery but are currently unable to afford it. However, it's a deceptive practice that can further financially ruin consumers. While [[Buy Now Pay Later|BNPL]] can defer payments interest free, it does charge late fees. Consumers that are already financially strapped for cash may find it difficult to repay these loans if they are not careful. This may boost Doordash's profits by taking advantage of consumers that are not financially savvy. | ||
===Using Dashpass subscription model to surcharge business's on order commissions=== | ===Using Dashpass subscription model to surcharge business's on order commissions=== | ||
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With many menus, consumers expect an accurate description of what they are ordering along with the ingredients that are being used to make it. In recent years companies have started relying on AI to generate a description and a complimentary photo of what the dish should look like. But in many cases this was done to falsely advertise to boost sales. We can look to an earlier instance during the lock down when ghost kitchens were popular;<blockquote>"Ghost kitchens are allegedly using AI-generated images on food delivery sites such as GrubHub and DoorDash. The images are used to promote online orders from kitchens that solely sell their food via online delivery services. Rather than using real photographers, they are using images of food that do not exist."<ref name=":11">{{Cite web |last=Baker |first=Alex |date=2024-02-28 |title=The photos that you see on food delivery apps are probably AI |url=https://www.diyphotography.net/ghost-kitchens-using-ai-images-on-food-delivery-apps/ |url-status=live |access-date=2025-04-11 |website=DiyPhotography}}</ref></blockquote>Of which many delivered products that did not match the item description at all or was poorer quality than what was shown to them within ordering. Not to mention in many countries<blockquote>"there are firm advertising laws that state exactly what you have to show and what can be substituted in food photography. This helps protect consumers, making sure they get what they order."<ref name=":11" /></blockquote>Meaning when generating a picture of food it is not considered edible by many countries standards and may even be illegal. But industries are constantly changing; custom diffusion models being packaged like Swipeby to provide cheap alternatives to make selling menu items at a higher volume.<blockquote>"The company points to a survey from Snappr, a photography and visual content platform, that found high-quality food photos can increase orders on restaurant delivery apps by 35%."<ref name=":12">{{Cite web |last=Canton |first=Rafael |date=2023-04-07 |title=The picture of that food you’re ordering online may have been created by AI |url=https://www.fastcompany.com/90870969/food-delivery-startup-ai-photos-swipeby |url-status=live |access-date=2025-04-11 |website=FastCompany}}</ref></blockquote>By seeing the results that such a tool can provide shows how pressing it can be for other businesses to compete if they are not also resorting to the same measures. During this time Doordash had policies about having generative photos for menu items; the founder however thinks things will change soon as he said "Give it six months, that will change,” he says. “I will bet money on it. Because with AI generation right now, it makes so much sense."<ref name=":12" /> And as of 2025 Doordash has launched it's own tool for generating AI menus on it's platform which is able to generate descriptions and pictures of an item being listed.<blockquote>''“At DoorDash, we believe AI should make life easier for restaurants—not more complicated. It’s about using automation to enhance the guest experience while keeping the operator’s unique touch front and center,” said Arpit Dhariwal, Head of Product, Merchant Acquisition & Growth at DoorDash. “AI-powered tools are built to take everyday tasks off operators’ plates, allowing restaurants to focus on what matters most—delivering great food and service. We're excited to help drive more orders, save time, and support continued growth for our restaurant partners.”''</blockquote>As we have seen earlier higher profit margins has caught Doordash's attention. Since they also make more money from users seeing results that may resemble the food that will be ordered as a first result. However this tool can be used nefariously like how ghost kitchens used it to falsely advertise the quality and resemblance of the food being shown to the consumers of the app. It may be important to exercise caution from now on against actors that would leverage this tool against the consumer especially since there seems to be nothing in place to warn the consumer that the current item that is being viewed was generated by their AI tool. This leaves an extremely high risk that a consumer may be unsatisfied with an order because it did not match the description or the photo being listed on Doordash. | With many menus, consumers expect an accurate description of what they are ordering along with the ingredients that are being used to make it. In recent years companies have started relying on AI to generate a description and a complimentary photo of what the dish should look like. But in many cases this was done to falsely advertise to boost sales. We can look to an earlier instance during the lock down when ghost kitchens were popular;<blockquote>"Ghost kitchens are allegedly using AI-generated images on food delivery sites such as GrubHub and DoorDash. The images are used to promote online orders from kitchens that solely sell their food via online delivery services. Rather than using real photographers, they are using images of food that do not exist."<ref name=":11">{{Cite web |last=Baker |first=Alex |date=2024-02-28 |title=The photos that you see on food delivery apps are probably AI |url=https://www.diyphotography.net/ghost-kitchens-using-ai-images-on-food-delivery-apps/ |url-status=live |access-date=2025-04-11 |website=DiyPhotography}}</ref></blockquote>Of which many delivered products that did not match the item description at all or was poorer quality than what was shown to them within ordering. Not to mention in many countries<blockquote>"there are firm advertising laws that state exactly what you have to show and what can be substituted in food photography. This helps protect consumers, making sure they get what they order."<ref name=":11" /></blockquote>Meaning when generating a picture of food it is not considered edible by many countries standards and may even be illegal. But industries are constantly changing; custom diffusion models being packaged like Swipeby to provide cheap alternatives to make selling menu items at a higher volume.<blockquote>"The company points to a survey from Snappr, a photography and visual content platform, that found high-quality food photos can increase orders on restaurant delivery apps by 35%."<ref name=":12">{{Cite web |last=Canton |first=Rafael |date=2023-04-07 |title=The picture of that food you’re ordering online may have been created by AI |url=https://www.fastcompany.com/90870969/food-delivery-startup-ai-photos-swipeby |url-status=live |access-date=2025-04-11 |website=FastCompany}}</ref></blockquote>By seeing the results that such a tool can provide shows how pressing it can be for other businesses to compete if they are not also resorting to the same measures. During this time Doordash had policies about having generative photos for menu items; the founder however thinks things will change soon as he said "Give it six months, that will change,” he says. “I will bet money on it. Because with AI generation right now, it makes so much sense."<ref name=":12" /> And as of 2025 Doordash has launched it's own tool for generating AI menus on it's platform which is able to generate descriptions and pictures of an item being listed.<blockquote>''“At DoorDash, we believe AI should make life easier for restaurants—not more complicated. It’s about using automation to enhance the guest experience while keeping the operator’s unique touch front and center,” said Arpit Dhariwal, Head of Product, Merchant Acquisition & Growth at DoorDash. “AI-powered tools are built to take everyday tasks off operators’ plates, allowing restaurants to focus on what matters most—delivering great food and service. We're excited to help drive more orders, save time, and support continued growth for our restaurant partners.”''</blockquote>As we have seen earlier higher profit margins has caught Doordash's attention. Since they also make more money from users seeing results that may resemble the food that will be ordered as a first result. However this tool can be used nefariously like how ghost kitchens used it to falsely advertise the quality and resemblance of the food being shown to the consumers of the app. It may be important to exercise caution from now on against actors that would leverage this tool against the consumer especially since there seems to be nothing in place to warn the consumer that the current item that is being viewed was generated by their AI tool. This leaves an extremely high risk that a consumer may be unsatisfied with an order because it did not match the description or the photo being listed on Doordash. | ||
=== | ===Multiple lawsuits due to unlawful business practices<ref name=":2" />=== | ||
====Class-action lawsuit for misclassifying workers (2017)==== | ====Class-action lawsuit for misclassifying workers (2017)==== | ||
A class-action litigation suit was filed for Doordash in allegedly labeling delivery workers in California and Massachusetts as independent contractors. An agreement was later reached in 2022 where Doordash payed out $100 million dollars. $61 million would be going to the effected 900,000+ drivers in both states, paying approximately $130 dollars per driver; with the other $28 million going to the lawyers.<ref name=":13">{{Cite web |last=Whitney |first=Kimball |date=2021-09-01 |title=DoorDash Settlement Would Pay a Paltry $130 to Workers Instead of Making Them Employees |url=https://gizmodo.com/doordash-settlement-would-pay-a-paltry-130-to-workers-1847586519 |url-status=live |access-date=2025-06-07 |website=Gizmodo}}</ref><ref>{{Cite web |last=Maeve |first=Allsup |date=2021-12-22 |title=DoorDash $100 Million Driver Settlement Tentatively Approved |url=https://news.bloomberglaw.com/daily-labor-report/doordash-100-million-driver-settlement-tentatively-approved |url-status=live |access-date=2025-06-07 |website=Bloomberg Law}}</ref> A quite minor sum for Doordash considering their CEO got payed $413 million dollars just the year before the settlement.<ref name=":13" /> | A class-action litigation suit was filed for Doordash in allegedly labeling delivery workers in California and Massachusetts as independent contractors. An agreement was later reached in 2022 where Doordash payed out $100 million dollars. $61 million would be going to the effected 900,000+ drivers in both states, paying approximately $130 dollars per driver; with the other $28 million going to the lawyers.<ref name=":13">{{Cite web |last=Whitney |first=Kimball |date=2021-09-01 |title=DoorDash Settlement Would Pay a Paltry $130 to Workers Instead of Making Them Employees |url=https://gizmodo.com/doordash-settlement-would-pay-a-paltry-130-to-workers-1847586519 |url-status=live |access-date=2025-06-07 |website=Gizmodo}}</ref><ref>{{Cite web |last=Maeve |first=Allsup |date=2021-12-22 |title=DoorDash $100 Million Driver Settlement Tentatively Approved |url=https://news.bloomberglaw.com/daily-labor-report/doordash-100-million-driver-settlement-tentatively-approved |url-status=live |access-date=2025-06-07 |website=Bloomberg Law}}</ref> A quite minor sum for Doordash considering their CEO got payed $413 million dollars just the year before the settlement.<ref name=":13" /> | ||
==== Data breach lawsuit (2019) ==== | ====Data breach lawsuit (2019)==== | ||
In early may Doordash had a data breach with over 4.9 million effected individuals. All users who registered past April 5th 2018 were safe from the data that was stolen.<ref>{{Cite web |last=Whittaker |first=Zack |date=2016-09-26 |title=DoorDash confirms data breach affected 4.9 million customers, workers and merchants |url=https://techcrunch.com/2019/09/26/doordash-data-breach/ |url-status=live |access-date=2025-05-16 |website=Tech Crunch}}</ref> This has resulted in a class action in October 2019 against Doordash for not protecting user data.<ref>{{Cite web |last=Shaak |first=Erin |date=2019-08-04 |title=DoorDash Sued Over 2019 Data Breach Affecting More Than 4.9 Million Users |url=https://www.classaction.org/news/doordash-sued-over-2019-data-breach-affecting-more-than-4-9-million-users |url-status=live |access-date=2025-06-16 |website=Class Action Org}}</ref> | In early may Doordash had a data breach with over 4.9 million effected individuals. All users who registered past April 5th 2018 were safe from the data that was stolen.<ref>{{Cite web |last=Whittaker |first=Zack |date=2016-09-26 |title=DoorDash confirms data breach affected 4.9 million customers, workers and merchants |url=https://techcrunch.com/2019/09/26/doordash-data-breach/ |url-status=live |access-date=2025-05-16 |website=Tech Crunch}}</ref> This has resulted in a class action in October 2019 against Doordash for not protecting user data.<ref>{{Cite web |last=Shaak |first=Erin |date=2019-08-04 |title=DoorDash Sued Over 2019 Data Breach Affecting More Than 4.9 Million Users |url=https://www.classaction.org/news/doordash-sued-over-2019-data-breach-affecting-more-than-4-9-million-users |url-status=live |access-date=2025-06-16 |website=Class Action Org}}</ref> | ||
==== Withholding of tips and subsequent class-action lawsuits (2019) | ====Withholding of tips and subsequent class-action lawsuits (2019)==== | ||
In July, Doordash's tipping payout to drivers was critiqued by the New York Times, The Verge and Gothamist. The pay structure in question is where the Dasher would get payed a minimum amount for each order by Doordash. If the customer added a tip it would cover the companies expenses first to cover the minimum. the remaining amount of the tip would go to the dasher that was deducted from Doordash. | In July, Doordash's tipping payout to drivers was critiqued by the New York Times, The Verge and Gothamist.<ref>{{Cite web |last=Newman |first=Andy |date=2019-06-21 |title=My Frantic Life as a Cab-Dodging, Tip-Chasing Food App Deliveryman |url=https://www.nytimes.com/2019/07/21/nyregion/doordash-ubereats-food-app-delivery-bike.html |url-status=live |access-date=2025-06-27 |website=New York Times}}</ref><ref>{{Cite web |last=Vincent |first=James |date=2019-07-22 |title=Delivery apps like DoorDash are using your tips to pay workers’ wages |url=https://www.theverge.com/2019/7/22/20703434/delivery-app-tip-pay-theft-doordash-amazon-flex-instacart |url-status=live |access-date=2025-06-27 |website=The Verge}}</ref><ref>{{Cite web |last=Ghaffary |first=Shirin |date=2019-08-20 |title=DoorDash is still pocketing workers’ tips, almost a month after it promised to stop |url=https://www.vox.com/recode/2019/8/20/20825937/doordash-tipping-policy-still-not-changed-food-delivery-app-gig-economy |url-status=live |access-date=2025-06-27 |website=Vox}}</ref><ref name=":10">{{Cite web |last=Lampen |first=Claire |date=2019-07-10 |title=Brooklyn Man Sues DoorDash Over Grifty, Misleading Tip Policy |url=https://gothamist.com/2019/07/30/doordash_tipping_lawsuit.php |url-status=live |archive-url=https://web.archive.org/web/20190805221244/https://gothamist.com/2019/07/30/doordash_tipping_lawsuit.php |archive-date=2019-08-05 |access-date=2025-06-27 |website=Gothamist}}</ref> The pay structure in question is where the Dasher would get payed a minimum amount for each order by Doordash. If the customer added a tip it would cover the companies expenses first to cover the minimum. the remaining amount of the tip would go to the dasher that was deducted from Doordash.<ref name=":10" /><ref name=":14">{{Cite web |last=Wayt |first=Theo |date=2019-06-29 |title=Brooklyn man sues DoorDash for ‘misleading’ tipping policy |url=https://nypost.com/2019/07/29/brooklyn-man-sues-doordash-for-misleading-tipping-policy/ |url-status=live |access-date=2025-06-27 |website=New York Post}}</ref> | ||
Later in 2020 Doordash was exposed for lying about pocketing portions of drivers tips, generating additional revenue for the company that dashers were unaware or uninformed about. This was happening after the company claimed it had refactored it's tipping system to be more transparent. But Doordash was still continuing to skim payouts for deliveries from dashers. | Later in 2020 Doordash was exposed for lying about pocketing portions of drivers tips, generating additional revenue for the company that dashers were unaware or uninformed about. This was happening after the company claimed it had refactored it's tipping system to be more transparent. But Doordash was still continuing to skim payouts for deliveries from dashers.<ref>{{Cite web |last=Keck |first=Catie |date=2020-01-07 |title=The Villain Always Wins |url=https://gizmodo.com/the-villain-always-wins-1841070357 |url-status=live |access-date=2025-06-27 |website=Gizmodo}}</ref><ref>{{Cite web |last=Keck |first=Catie |date=2019-03-15 |title=DoorDash Has Been Confusing Its Workers About Payments for Nearly Two Years |url=https://gizmodo.com/doordash-has-been-confusing-its-workers-about-payments-1833327287 |url-status=live |access-date=2025-06-27 |website=Gizmodo}}</ref><ref>{{Cite web |last=Keck |first=Catie |date=2019-12-10 |title=DoorDash Has a New Plan to Make Workers Gamble on How Much They’ll Get Paid |url=https://gizmodo.com/doordash-has-a-new-plan-to-make-workers-gamble-on-how-m-1840325285 |url-status=live |access-date=2025-06-27 |website=Gizmodo}}</ref><ref>{{Cite web |last=Ellis |first=Avery |date=2020-01-16 |title=DoorDash Contractors Earn Less Than Dogshit, Study Finds |url=https://gizmodo.com/doordash-contractors-earn-less-than-dogshit-study-find-1841048784 |url-status=dead |access-date=2025-06-27 |website=Gizmodo}}</ref> | ||
This had led a customer to file a class action suit against the company claiming "materially false and misleading" in app tipping feature. The case was later moved to an arbitration hearing in August. Facing negative exposure and bad press the company finally complied to change their payout policy. The lawsuit was settled by District of Columbia Attorney General Karl Racine for $2.5 million with most of the amount going to dashers, government and charity. | This had led a customer to file a class action suit against the company claiming "materially false and misleading" in app tipping feature.<ref name=":10" /><ref name=":14" /> The case was later moved to an arbitration hearing in August.<ref>{{Cite web |last=Casetext |date=2020-08-24 |title=Arkin v. DoorDash, Inc. |url=https://casetext.com/case/arkin-v-doordash-inc |url-status=dead |archive-url=https://web.archive.org/web/20230213085836/https://casetext.com/case/arkin-v-doordash-inc |archive-date=2023-02-13 |access-date=2025-06-27 |website=Casetext}}</ref> Facing negative exposure and bad press the company finally complied to change their payout policy.<ref>{{Cite web |last=Abril |first=Danielle |date=2019-11-12 |title=DoorDash’s New Tipping Policy Has Increased Driver Pay |url=https://fortune.com/2019/11/12/doordash-new-tipping-policy-worker-pay/ |url-status=live |website=Fortune}}</ref><ref>{{Cite web |last=Newman |first=Andy |date=2019-07-24 |title=DoorDash Changes Tipping Model After Uproar From Customers |url=https://www.nytimes.com/2019/07/24/nyregion/doordash-tip-policy.html |url-status=live |website=New York Times}}</ref> The lawsuit was settled by District of Columbia Attorney General Karl Racine for $2.5 million with most of the amount going to dashers, government and charity.<ref>{{Cite web |last=Kerr |first=Dara |date=2020-11-25 |title=DoorDash settles lawsuit for $2.5M over 'deceptive' tipping practices |url=https://www.cnet.com/tech/mobile/doordash-settles-lawsuit-for-2-5m-over-deceptive-tipping-practices/ |url-status=live |access-date=2025-06-27 |website=CNET}}</ref><ref>{{Cite web |last=Canales |first=Katie |date=2020-11-25 |title=DoorDash is paying $2.5 million to settle a lawsuit that accused the food delivery company of stealing drivers' tips |url=https://www.businessinsider.com/doordash-25-million-settlement-lawsuit-tipping-model-2020-11 |url-status=live |website=Business Insider}}</ref><ref>{{Cite web |last=OAC |date=2020-11-24 |title=AG Racine Reaches $2.5 Million Agreement with DoorDash for Misrepresenting that Consumer Tips Would Go to Food Delivery Drivers |url=https://oag.dc.gov/release/ag-racine-reaches-25-million-agreement-doordash |website=Office of the Attorney General for the District of Columbia}}</ref> | ||
=== Antitrust litigation (2020) === | |||
The Dacitashvili has filed against Grubhub, Doordash, Postmates and Uber Eats for having a majoritive monopoly over the food delivery market because of the way it selectively signed contracts with businesses to list them on the platform. Many of the clauses stated that delivery prices will be identical to dine in prices.<ref name=":15">{{Cite web |last=Allyn |first=Bobby |date=2020-05-14 |title=Restaurants Are Desperate — But You May Not Be Helping When You Use Delivery Apps |url=https://www.npr.org/2020/05/14/856444431/cities-crack-down-on-food-delivery-app-fees-as-restaurants-struggle-to-survive |url-status=live |access-date=2025-08-30 |website=NPR}}</ref><ref name=":16">{{Cite web |last=Stempel |first=Jonathan |date=2020-04-13 |title=Grubhub, DoorDash, Postmates, Uber Eats are sued over restaurant prices amid pandemic |url=https://www.reuters.com/article/us-health-coronavirus-food-delivery-laws-idUSKCN21V2C1/ |url-status=live |access-date=2020-08-30 |website=Reuters}}</ref> Plaintiffs argued that this increased the cost unfairly to dine-in customers because all defendants required the restaurants to cover the delivery fees ranging from 13% - 40% of revenue.<ref name=":15" /><ref name=":16" /> Keep in mind that restaurants like supermarkets runs on slim profit margins with the average being 3% - 9% total. This case seeks treble damages (multiply all damages by 3) for overcharges from the beginning of 2016 of April from the defendants delivery apps.<ref name=":15" /><ref name=":16" /><ref>{{Cite web |date=2020-04-13 |title=Case 1:20-cv-03000-LAK Document |url=https://s3.documentcloud.org/documents/6890558/DAVITASHVILI-v-Grubhub-ET-AL.txt |url-status=live |archive-date= |access-date=2025-08-30 |website=S3 Documentcloud}}</ref> Many preliminaries have happened since then but is unclear when the trial will actually begin. | |||
"<blockquote> | "<blockquote> | ||
===Driver strike for tip transparency (2021)=== | ===Driver strike for tip transparency (2021)=== | ||
In July 2021, DoorDash drivers went on strike to protest lack of tip transparency and to ask for higher pay. At the time of the strike, and, as of June 2022, DoorDash did not allow drivers to see the full tip amounts prior to accepting a delivery in the app. If customers tip over a set amount for the order total, Doordash hides a portion of the tip until the delivery is complete. The strike occurred after DoorDash rewrote its code to cut off access to Para, a third-party app that drivers had been using to see the full tip amounts. | In July 2021, DoorDash drivers went on strike to protest lack of tip transparency and to ask for higher pay. At the time of the strike, and, as of June 2022, DoorDash did not allow drivers to see the full tip amounts prior to accepting a delivery in the app. If customers tip over a set amount for the order total, Doordash hides a portion of the tip until the delivery is complete. The strike occurred after DoorDash rewrote its code to cut off access to Para, a third-party app that drivers had been using to see the full tip amounts. | ||