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DC attorney general sends cease-and-desist letter to DoorDash over premium service

DC attorney general sends cease-and-desist letter to DoorDash over premium service
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D.C. Attorney General Karl Racine sent a cease-and-desist letter to DoorDash on Tuesday night, warning the company that its premium service may break local law.

The letter cautions that if the company's DashPass program charges some District restaurants a 30 percent commission, it would violate legislation passed earlier this year setting a 15 percent cap on third party-delivery commissions, according to a person with knowledge of the letter.

The service lets diners pay $9.99 a month for unlimited delivery with zero fees on orders totaling $15 or more. Vendors can also sign up to have their restaurants receive greater visibility for the premium customers.

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DoorDash had begun reaching out to D.C. restaurants late last month saying commissions would be increased starting Dec. 9 for orders when both customers and vendors are participating in DashPass.

Washington City Paper first reported on DoorDash planning to up the commission.

The company argues that the service shouldn’t be required to stay below the 15 percent cap because it is a “premium marketing service” and the extra fees are needed for things like background checks.

But a spokesperson for the DoorDash told The Hill on Wednesday that the company has chosen not to raise the commissions “at this time.”

“We recognize that there has been confusion as a result of our response to the unintended consequences of the pricing regulations in Washington, DC,” the spokesperson said.

The attorney’s general office is requesting a response to its cease-and-desist letter by the end of the day Wednesday. DoorDash has not yet replied but plans to meet the deadline, the spokesperson said.

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The back-and-forth over fee caps is unlikely to end anytime soon, as DoorDash intends to keep pushing for an exception.

The law capping commissions is part of emergency legislation passed to address the coronavirus, and is set to expire once the public health emergency has concluded.

Racine and DoorDash settled for $2.5 million last month over allegations that the food delivery service misled consumers with its tipping system, using tips to subsidize worker pay rather than giving them directly to drivers.