DC Attorney General Karl Racine has filed a lawsuit against Instacart, a grocery delivery and pick-up service, accusing the company of charging District consumers millions of dollars in deceptive service fees and failing to pay hundreds of thousands of dollars in sales tax.
According to the Office of the Attorney General (OAG), Instacart did not openly notify its customers that optional service fees were included on their bills, making them look like tips for its delivery employees, for 18 months.
“Instacart tricked District consumers into believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” said Racine in a press release.
“Instacart used these deceptive fees to cover its operating costs while simultaneously failing to pay D.C. sales taxes. We filed suit to force Instacart to honor its legal obligations, pay D.C. the taxes it owes, and return millions of dollars to District consumers the company deceived.”
— AG Karl A. Racine (@AGKarlRacine) August 27, 2020
Starting in April 2018, the San Francisco-based company changed its policy on service fees in response to warnings from OAG, but it did not refund its consumers.
The lawsuit is aiming to get a court order to force Instacart to provide restitution to District consumers who were charged deceptive service fees, and to recover unpaid sales taxes.
Civil penalties for violating consumer protection law, penalties for violating tax law, interest on unpaid taxes, as well as costs for the investigation are also sought as part of the lawsuit.