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The Washington Post reports that delivery service Instacart is being sued by the Washington, DC, Attorney General Karl A. Racine over allegations that "it has failed to pay hundreds of thousands of dollars in District sales tax and deceived local consumers into believing extra service fees were actually tips for workers."

Here's how the Post frames the story:

"Racine’s office claims that from September 2016 through April 2018, the company charged consumers in the District a default 'service fee' set at 10 percent of the order total, which the lawsuit alleges appeared as a tip to any 'reasonable customer.'  Instacart users had an option to adjust the percentage or waive the fee entirely, the suit says, but 'unlike a tip, the service fee went to Instacart and did not change the wages or commissions that the company paid its shoppers.'

"Racine’s office says Instacart implemented a mandatory service fee in 2018 after media reports highlighting the issue but has since refused to refund customers who they say were deceptively charged.

"The suit, filed in D.C. Superior Court, also claims that Instacart failed to collect sales tax on the service fees and delivery fees it charged users for the entire time it has operated in the District."

Instacart has replied that the lawsuit is "meritless and argued that customer transparency is 'incredibly important'."

The Post notes that this is not the first time that the DC Attorney General has played at this particular table:  "Racine sued the popular food delivery service DoorDash last year, accusing the company of pocketing millions in worker tips and using them to cover labor costs."

KC's View:

Without passing judgement on the merits of the case, I would just point out that the DC-area retailers using Instacart as their e-commerce solutions provider - while simultaneously allowing it to have access to customer data with which it eventually can/will compete with those retailers - now are in a position where the company that interacts with its shoppers now is being accused of deceiving them.

Just sayin'…