Doordash

Doordash

Basic information
Founded	2013
Type	Public
Industry	Online Delivery
Official website	https://www.doordash.com/

DoorDash was founded in June 2013, initially starting as PaloAltoDelivery.com before rebranding to Doordash. The company was founded by three Stanford students Tony Xu, Andy Fang, and Stanley Tang. Its focus is delivery on a wide variety of items, some items include fresh meals from nearby restaurants, groceries, convenience store items, OTC (Over the Counter) medicines, flowers, etc... This service mainly operates in locations within the U.S. (United States), Canada, and Australia.

Consumer-impact summary

Over the years of operation DoorDash has found itself in many controversial consumer and workers violations. Some of the most notable being:

• Withholding dashers funds (up to weeks or months) for delivering orders
• Lack of Business transparency especially with delivery fees and higher menu pricing
• Exposing millions of sensitive dashers and company information in a breach
• Adding restaurants to their platform to order without the business's consent
• Using driver tips to cover the cost of other deliveries
• Using BNPL (Buy Now Pay Later) services to target the financially challenged consumers
• Using AI to falsely advertise what menu items look like
• Subsidizing Dashpass subscriptions by passing commission rates onto business's
• Multiple losses settling lawsuits due to unfair business practices

Incidents

Withholding funds for contracted drivers

According to Doordash,

"Dashers get paid on a weekly basis for all deliveries or tasks completed between Monday - Sunday of the previous week (ending Sunday at midnight local time). Payments are transferred directly to your bank account through Direct Deposit and usually take 2-3 days to show up in your bank account, so payments will appear by Wednesday night."

Even though they are treated like contractors they are still payed within a weekly basis instead of a quota based system. Many users who contract with Doordash need funds quickly to be able to cover daily expenses. This puts the dashers in a tough spot relying on cash tips if any to continue to get by until they are able to retrieve their weekly pay. However Doordash has already thought of this and created Fastpay.

"Fast Pay allows Dashers to cash out their earnings daily for a small fee of $1.99. This means that Dashers can receive their earnings on demand through DoorDash, rather than waiting for their weekly direct deposit or using a third party service."

By holding dashers funds they are incurring free interest on the money by not paying out the dasher as soon as a delivery is completed. By taking advantage of desperate workers they can make more money off of the original transaction.

Charging users unclear "fees" for delivery

Like many businesses Doordash does need to cover expenses that the company has. The issue lies with the transparency of how they do business with the customer base within their app. Many consumers have taken a legal class action lawsuit against Doordash. The suit alleges Doordash's unfair Value based pricing by leveraging their algorithm and pricing model changes on a per customer basis; and not what they order. Specific examples include: delivery fee, any form of a hidden marketing fee or hidden commission fee. Doordash has denied all alleged claims referring to it as a "copy-and-paste job".

This is also combined with the fact that Doordash's menu prices are also considerably higher than the original venues that items or commodities could be purchased at. "Without letting consumers know, DoorDash is able to raise the prices of menu items in order to turn a greater profit." leaving consumers none the wiser unless they actually checked by either visiting a company site (which may not be possible due to them handling takeout) or going in person to check their pricing. Thus leaving the consumer completely unaware that they are being overcharged on the goods being provided by the service. While some restaurants have admitted to allowing price increases for delivery, however in some cases "this is even done without the restaurant’s permission. Which means that they are also not receiving any of the extra money." leaving Doordash to pocket all the extra profit for itself on top of all the other fees it charges it's services.

Data breach exposing millions of dashers and company info

In mid 2019 Doordash suffered a data breach that affected 4.9 million customers, drivers and businesses sensitive information combined. Individuals that had joined Doordash after April 5th of 2018 were not affected. this breach took 5 months to be found. Doordash claims that "a third-party service provider," was to blame for this leak, but the third party was never named. The contents of the data exposed has been disclosed with this chart below.

Breached Data that was exposed

Customers	name, email and delivery addresses, order history, phone numbers, hashed & salted passwords and the last four digits of their payment cards taken.
Dashers	last four digits of their bank account numbers stolen, Approximately 100,000 had their drivers license stolen.
Companies	last four digits of their bank account numbers stolen

Many consumers complained the year before about their account being hacked. But were assured by Doordash that it was not a breach and "claimed attackers were running credential stuffing attacks". This shows they did not take customers reports seriously and had a breach shortly after due to the companies opsec negligence.

Adding restaurants to their platform without other business's consent

Starting around 2020 Doordash had decided that the company needed more outreach. To do this the company started adding business that had no arrangements for takeout or delivery without the owners consent. This has led to increased stress on businesses that were not ready for a higher influx of volume orders but also being charged up to 30% in referral fees depending on the business. Many small cooperation's and restaurants were impacted the most due to these policies; mostly because profit margins are usually lower than a multi billion dollar franchise that has been tailored to do takeout for decades or industry chains that are used to higher order volumes. Behavior like this may end up running smaller unprepared business operations to close permanently leaving only the bigger cooperation's to compete for the consumers purchasing power.

Pocketing driver app tips to payout other dashers

In February 24 of 2025, a press release statement New York Attorney General Letitia James released the results of their investigation stating that Doordash between May 2017 and September 2019

“used customer tips to offset the base pay it had already guaranteed to workers, instead of giving workers the full tips they rightfully earned.”

Doordash has lost this lawsuit and was ordered to pay a hefty sum for mistreating the contractors about transparent pay as seen below for further detail

"DoorDash will pay $16.75 million in restitution for Dashers and up to $1 million in settlement administrator costs to help issue the payments."

Doordash has responded to the litigation loss by stating it was an "old pay structure" as they are currently using a newer one where contractors keep all their tips.

The old pay structure that Doordash's PR team was referring to would only show dashers tip amount if it was higher than what Doordash was willing to pay them for that contract batch. In many cases when the tip amount failed to surpass what the company was willing to pay the dasher for the order it was often taken and spread across other orders that may have had a lower initial payout. This "old pay structure" has impacted over 63,000 New Yorker's alone.

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. 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. All this just to boost Doordash's profit margins by taking advantage of consumers that are either financially challenged or illiterate.

Using Dashpass subscription model to surcharge business's on order commissions

"About eight months after Washington, D.C. placed a 15% cap on third-party delivery commission fees to help restaurants during the pandemic, DoorDash appears to have found a workaround. According to the Washington City Paper, restaurants that use DoorDash’s DashPass subscription feature were sent a notice stating that the cap is “only applicable to Classic orders” and doesn’t apply to the DashPass program."..."DoorDash calls DashPass an “optional, premium offering and separate from DoorDash’s core services.” The company said that beginning Dec. 9, it will begin charging restaurants the contractual rate in their original agreements, City Paper reports. The changes to DashPash charges are part of a limited test in fewer than five cities, including D.C. and cities in the Bay Area."

By using this workaround, Doordash has negatively impacted many small businesses and restaurants that operate within the area. They did however allow "Merchants can choose to opt out of DashPass at any time, a DoorDash spokesperson said". Though there are many consumers that do use Dashpass due to the savings for users that use their delivery services frequently. By opting out businesses are effectively blacklisting themselves from the users that frequently use the app for deliveries. Doordash's spokesperson justifies this

"The spokesperson called delivery fee restrictions a “one-size fits all” solution that impacts the company’s ability to provide quality service and pay. Merchant fees help the company cover business costs like Dasher pay, background checks, occupational Dasher insurance and website upkeep, the spokesperson said."

Which apparently the Dashpass subscription that consumers pay does not cover this. This is just an excuse to further pass on costs while maintaining the profits of the subscription and free delivery; which is the main selling point of the subscription service.

This has caught the eye of D.C. Attorney General Karl Racine in December 10 of 2020. As they have sent a cease and desist notice on Tuesday warning Doordash that charging restaurants more than 15% on commissions may violate District laws. The company complied two days later stating they "decided not to charge DC restaurants their contractual DashPass rate at this time."

Using AI to falsely advertise what menu items look like

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;

"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."

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

"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."

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.

"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%."

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." 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.

“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.”

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.

Settling lawsuits due to unlawful business practices

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. A quite minor sum for Doordash considering their CEO got payed $413 million dollars just the year before the settlement.

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Class-action lawsuit for misclassifying workers (2017)

In 2017, a class-action lawsuit was filed against DoorDash for allegedly misclassifying delivery drivers in California and Massachusetts as independent contractors. In 2022, a tentative settlement was reached in which DoorDash would pay $100 million total, with $61 million going to over 900,000 drivers, paying out just over $130 per driver, and $28 million for the lawyers. Gizmodo criticized the settlement, noting that the $413 million that DoorDash CEO Tony Xu received the previous year was one of the largest CEO compensation packages of all time.

Data breach lawsuit (2019)

On May 4, 2019, DoorDash confirmed 4.9 million customers, delivery workers and merchants had sensitive information stolen via a data breach. Those who joined the platform after April 5, 2018, were unaffected by the breach. A class-action lawsuit for the breach was filed against DoorDash in October 2019.

Withholding of tips and subsequent class-action lawsuits (2019)

In July 2019, the company's tipping policy was criticized by The New York Times, and later The Verge and Vox and Gothamist. Drivers receive a guaranteed minimum per order that is paid by DoorDash by default. When a customer added a tip, instead of going directly to the driver, it first went to the company to cover the guaranteed minimum. Drivers then only directly received the part of the tip that exceeded the guaranteed minimum per order.

In January 2020, it was reported that DoorDash had lied about skimming tips from its drivers, causing them to earn an average of $1.45 an hour after expenses, and that after the company had allegedly overhauled its tipping system, DoorDash was still manipulating per-delivery payouts at the expense of drivers.

A DoorDash customer filed a class action lawsuit against the company for its "materially false and misleading" tipping policy. The case was referred to arbitration in August 2020. Under pressure, the company revised its policy. The company settled a lawsuit with District of Columbia Attorney General Karl Racine for $2.5 million, with funds going to deliverers, the government, and to charity.

2020 antitrust litigation

In April 2020, in the case of Davitashvili v. GrubHub Inc. DoorDash, Grubhub, Postmates, and Uber Eats were accused of monopolistic power by only listing restaurants on their apps if the restaurant owners signed contracts which include clauses that require prices be the same for dine-in customers as for customers receiving delivery. The plaintiffs stated that this arrangement increases the cost for dine-in customers, as they are required to subsidize the cost of delivery; and that the apps charge "exorbitant" fees, which range from 13% to 40% of revenue, while the average restaurant's profit ranges from 3% to 9% of revenue. The lawsuit seeks treble damages, including for overcharges, since April 14, 2016, for dine-in and delivery customers in the United States at restaurants using the defendants’ delivery apps. Although several preliminary documents in the case have now been filed, a trial date has not yet been set.

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.

Litigation for illegal unauthorized restaurant listing (2021)

In May 2021, DoorDash was criticized for unauthorized listings of restaurants who had not given permission to appear on the app. The company was sued by Lona's Lil Eats in St. Louis, with the lawsuit claiming that DoorDash had listed them without permission, then prevented any orders to the restaurant from going through and redirecting customers to other restaurants instead, because Lona's was "too far away," when in reality it had not paid DoorDash a fee for listing. This aspect of DoorDash's business practice is illegal in California.

Lawsuit by the city of Chicago (2021)

In August 2021, the city of Chicago sued DoorDash and GrubHub. According to Chicago mayor Lori Lightfoot, the companies broke the law by using "unfair and deceptive tactics to take advantage of restaurants and consumers who were struggling to stay afloat during the COVID-19 pandemic." DoorDash and GrubHub denied the suit's merits.

Class-action lawsuit (2023)

DoorDash has been accused of charging users of iPhone more than users on the Android platform. User testing claimed to show several instances of various fees and delivery charges being higher when using an Apple device. DoorDash denied these allegations in response to the ongoing US$1 billion class-action suit.

Lawsuit by the city of Seattle (2023)

In August 2023, DoorDash was obligated to pay its drivers and the city of Seattle a total of $1.6 million. It was found that the platform made it difficult for users to request paid time off. DoorDash is to pay $1.1 million towards safe and sick time credits, $500k directly to drivers and an additional $8,500 in city fees.

Privacy lawsuit by the state of California (2024)

In February 2024, after being found to have illegally sold personal data, DoorDash was obligated to pay a $375,000 civil penalty as well as to begin complying with privacy laws it had been shirking, namely CCPA and CalOPPA.

Class-action lawsuit settlement (2025)

In 2025, DoorDash agreed to pay around $17 million for "misleading both consumers and delivery workers" with tips being docked from drivers' pay instead of directly going to drivers.

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Products

Dashpass (2018 - Present)

A premium program offered by Door Dash. This program offers free delivery on orders greater than $12 along with reduced service fees for deliveries. By paying the subscription price Doordash advertises this program as a cost saving measure for consumers that use their app frequently. This offer however has been subject to a variety of criticism. One of the more popular cases being hit with a cease-and-desist letter from DC attorney general for charging more than 15% on commissions to make up the losses of the companies free delivery policy with Dashpass.

See also

Link to relevant theme articles or companies with similar incidents.

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