A new complaint asks the Federal Trade Commission to investigate fees that Uber and DoorDash added to customer orders in Seattle following the implementation of a minimum wage law earlier this year.
The complaint, filed last week by nonprofit law firm Towards Justice on behalf of Seattle resident Robert White, alleges that the fees are deceptive and misleading. It also claims that the fee “bears no reasonable or logical relationship to the companies’ costs.”
Seattle’s minimum pay law, one of the first in the nation designed for independent contractors who deliver food, went into effect in January. Uber and DoorDash responded by adding a $5 fee to each consumer order, which caused demand to decline. The companies then began lobbying customers and lawmakers in a bid to change the law.
The Seattle City Council will vote next week on a revised legislation that would lower the existing minimum wage standard.
The complaint says the $5 fee set by Uber and DoorDash are “junk fees.” The FTC last year proposed a rule to ban such fees, described by the agency as “hidden and bogus fees that can harm consumers and undercut honest businesses.”
The complaint also alleges that the companies mislead consumers by suggesting that the fee is mandated by the City of Seattle, and that Uber and DoorDash misrepresent the total cost of delivery.
In an interview with GeekWire this week, White said he’s been using food delivery apps for several years. He began questioning the new fees earlier this year after realizing the $5 charge didn’t change based on the distance of a restaurant from his location or time spent by a driver delivering an order — which is how the minimum wage is calculated.
“I hope the FTC intervenes and says this is an illegal practice,” said White, a data manager for a Seattle-based nonprofit. “These are junk fees. They are deceptive. They’re not actually tied to the service that’s being provided.”
The complaint says the companies “use their complete control over prices and wages to manipulate the marketplace, rapidly increasing costs for every delivery by precisely the same amount in a manner that misleads consumers about the total cost of deliveries and the basis and justification for the fee.”
In a statement to GeekWire, DoorDash called the complaint “completely absurd and meritless.”
“The regulatory response fee charged on delivery orders in Seattle is clearly disclosed, accurately named, and thoroughly explained within the DoorDash app,” the company said. DoorDash said “the regulatory response fee applied to orders in Seattle helps offset the costs associated with this law.”
“Unfortunately, this fee is a direct result of the law passed by the Seattle City Council,” Uber said in a statement. “As we told policymakers before the law was enacted, to support the requirements of the ordinance and to continue to operate in the City of Seattle, the price of these services would increase.”
The FTC declined to comment on the complaint in response to an inquiry from GeekWire.
David Seligman, executive director of Towards Justice, said there’s nothing illegal about increasing price as a consequence of changes to labor standards. But he said the way Uber and DoorDash describe and present the $5 fee to consumers is the issue.
“I think we should all be deeply concerned about models of work that involve extraordinary control, exercised through algorithm, without labor rights,” Seligman told GeekWire.
In a brief from March related to junk fees, the White House said “food delivery apps are notorious for obfuscating delivery and service fees.”
DoorDash and Uber Eats are the top two food delivery companies in the U.S. CEOs from both companies have discussed Seattle’s minimum wage debate on recent earnings calls.
“These regulations clearly are having the opposite impact of what they intend to do,” DoorDash CEO Tony Xu said earlier this month.
The impact on driver pay from the new law appears to be mixed. Some drivers speaking at a Seattle City Council committee meeting earlier this month asked lawmakers to keep the existing pay standard because they are now making enough money to cover their rent. But several others said they were making substantially less income because of reduced demand.
The new ordinance would bring the minimum pay rate for delivery drivers from $26.40 to $19.97, in line with Seattle’s citywide minimum wage for employed workers.
Working Washington, a nonprofit that helped pass the original legislation in Seattle, released a report last month showing how the new revised ordinance would result in net pay of $13.17 per hour, due in part to expenses such as payroll taxes and mileage costs that drivers pay for on their own.
Seattle and New York City, which also recently implemented a minimum wage for delivery drivers, have become testing grounds for the impact of labor standards in a growing food delivery market facilitated by tech companies that tout the flexibility and independence offered by their platforms, but have come under scrutiny for their impact on workers and restaurants.
Driver pay has been in the spotlight in Minnesota, where Uber and Lyft threatened to leave the state due to a new minimum pay law. Last week the companies said they were staying after a new pay deal was reached.
Seattle’s minimum wage legislation was passed in 2022. It’s part of several unique “PayUp” laws approved recently in Seattle. Other “PayUp” policies include an ordinance related to the worker deactivation process and a 10-cent per-order fee approved in November that will help fund the implementation and enforcement of the “PayUp” laws. Seattle also passed a sick leave law for delivery workers last year.
Read the full complaint below.
Seattle resident files FTC complaint alleging Uber, DoorDash mislead customers with 'junk fees' by GeekWire on Scribd
