DC attorney general sues Instacart, claiming deceptive fees, failure to pay sales tax

A popular grocery delivery service, made even more in-demand during the COVID-19 pandemic, is being sued by D.C.’s attorney general.

Instacart is accused of charging customers millions of dollars in what are being called deceptive service fees, and of failing to pay hundreds of thousands of dollars in D.C. sales tax on service and delivery fees.

“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,” Attorney General Karl Racine said in a news release.

The service fee in question, which was set to a default 10% but adjustable, was charged from September 2016 through April 2018.

“Instacart used these deceptive fees to cover its operating costs while simultaneously failing to pay D.C. sales taxes,” Racine said.

He is suing to force Instacart to pay back the service fee money to customers, and to pay the sales tax he says is owed.

In response, Instacart said in a statement Thursday that “the accusations made in this complaint are without merit.”

The company touted its transparency to customers, saying, “In our product, we disclose to customers that tips are always separate from and in addition to any service fees, and we clearly indicate that service fees go towards our operations. Additionally, 100% of customer tips always go to Instacart shoppers who are providing an important essential service for customers.”

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