The attorney general of the District of Columbia, Karl Racine, has written a letter ordering DoorDash Inc. to stop charging eateries a 30 percent fee on each order through the delivery company’s DashPass subscription offering, Reuters reported, citing an unnamed source.
News of the reported letter comes on the heels of DoorDash reaching a $2.5 million settlement with the district’s attorney general for purportedly misrepresenting that diner tips would go to drivers.
The letter that was sent to the delivery company on Tuesday (Dec. 8) said that kind of a commission would contravene the district’s code that puts a 15 percent maximum on commissions for third-party food delivery companies.
“While DashPass is a premium marketing offering and provides benefits to many restaurants, we have decided to not charge DC restaurants their contractual DashPass rate at this time. We look forward to engaging with local policymakers to increase understanding of the impact pricing regulations have, and solutions that better serve customers, Dashers, and restaurants,” a representative for DoorDash said in a statement, per Reuters.
Commission rates of 30 percent may fall by the wayside where cities and states have been limiting what DoorDash can charge on eateries.
DoorDash said in an S-1 filing, “Many of our competitors are well capitalized and offer discounted services, lower merchant commission rates and consumer fees, incentives for independent contractors who provide delivery services and consumer discounts and promotions, innovative platforms and offerings, and alternative pay models, which may be more attractive than those that we offer.”
“Such competitive pressures may lead us to maintain or lower our commission rates and fees,” the food delivery company noted in the filing.
Multiple states have put caps on the fees that apps and platforms can charge on eateries. Washington state became an example late in November and joins New York City as well as New Jersey.
DoorDash, which is backed by SoftBank, reportedly priced its initial public offering (IPO) shares at $102 a piece at a $32.4 billion valuation.