WASHINGTON - A grocery delivery service that rose to prominence during the coronavirus pandemic allegedly pocketed fees that customers thought were tips for their delivery drivers, according to a lawsuit launched by D.C. prosecutors.
AG Karl Racine’s office announced the lawsuit against Instacart on Thursday, alleging that the company violated District tax law and failed to collect “hundreds of thousands of dollars in sales taxes.”
They say the company listed a 10-percent “service fee” for delivery services on its website.
Customers believed they were providing a tip for drivers, and the percentage could be adjusted according to what the customer desired to pay.
No alternate form of payment to the driver appeared to be available on the site.
District prosecutors are suing the company for restitution for consumers, back taxes and interested on taxes owed to D.C.
An eight year old company, San Francisco based Instacart posted its first profit during the onset of the coronavirus pandemic.
After losing $300 million in 2019, Instacart’s fortunes turned around in April when the pandemic forced Americans to remain home.
In April alone, the company netted a $10 million profit after delivering an estimated $700 million in groceries to its customers.