When Food Delivery Comes with a Side of Junk Fees

If you’ve ever used a food delivery app and wondered how a meal advertised as $15 could turn into one costing $25 at checkout, you’re not alone. Hidden fees are rampant in the online food delivery industry, costing consumers millions of dollars in unexpected charges.

Today, TINA.org submitted a comment to the FTC in response to the agency’s Advance Notice of Proposed Rulemaking on unfair or deceptive fees in online food delivery expressing support for a rule – and one that is broad enough to reach all corners of the food delivery market.

A booming industry and a roaring problem

The $432 billion online food delivery industry is used by roughly two-thirds of U.S. consumers. And across that market, the same pattern keeps repeating where platforms advertise low or zero delivery fees to attract customers, then impose a cascade of service fees, price markups and other mandatory charges that don’t show up until checkout – if they’re disclosed at all.

This results in consumers paying, on average, $12.80 in hidden fees per order and spending 21% more than they would if they were shown all-in pricing.

TINA.org has tracked more than a dozen class-action lawsuits against delivery platforms alone – including cases against Grubhub, DoorDash and Postmates – all alleging variations of the same conduct: charging undisclosed price markups on food deliveries.

Backing consumers into a corner

What makes this particularly insidious is the way hidden-fee architecture exploits consumer psychology. By the time consumers reach checkout and see the true total, they’ve already spent time selecting items, customizing orders and mentally committing to the meal (all potentially with a growling stomach). Abandoning the order means losing that time so rather than start the process all over again, many people proceed – and pay more than they had planned.

Research backs this up. Studies cited by the FTC confirm that consumers facing drip-pricing schemes frequently underestimate total costs and are reluctant to start over. And as one delivery-app user put it:

You see something listed as 15 bucks and then you go to checkout and it adds up to, like, 25, but you’ve already kind of in your head committed to getting that thing.

Nearly 30% of delivery app users admit to overspending as a result.

But the harm doesn’t stop with consumers. By advertising artificially low prices and then charging hidden fees, platforms gain an unfair advantage over competitors that are honest with their prices. Delivery workers suffer too: Between 40% and 60% of their earnings come from tips. And when consumers are blindsided by unanticipated costs by way of delivery and service fees, the unexpected increase to their total may mean they leave smaller tips for delivery drivers in order to stay within their budgets.

Why enforcement alone isn’t enough

The FTC has taken action against Grubhub, Instacart, Amazon and Walmart for fee-related deception. State attorneys general and city governments have secured settlements too, including in New York, Massachusetts, Pennsylvania, the District of Columbia and Chicago. And yet the practices persist.

That’s because case-by-case enforcement – while valuable – cannot keep pace with a market serving hundreds of millions of consumers across dozens of platforms. Without a rule, the FTC also lacks civil penalty authority, which limits the financial deterrent available against violators. A clear federal rule would change that.

What TINA.org is asking the FTC to do

Our comment urges the agency to promulgate a rule requiring, at a minimum: full upfront disclosure of all mandatory fees; itemized fee breakdowns before checkout; prohibitions on misleading “free delivery” claims; disclosure of any price markups versus in-store or restaurant prices; and disclosure of personalized pricing practices where different consumers get charged different prices for the same item.

But we’re also urging the FTC to think bigger.

While the agency appears focused on third-party platforms like DoorDash and Grubhub, deceptive fee practices are also used by restaurants and retailers. In fact, TINA.org has documented the same conduct with restaurants imposing their own deceptive fees for food deliveries, regardless of whether their food is delivered via a third-party service or through their own online ordering and delivery channels. Examples include:

• Wendy’s surreptitiously charging more for a meal that is delivered by way of a third-party delivery service – on top of any additional fees charged by the delivery platforms themselves.
• Pizza Hut advertising a $10 pizza without disclosing a $5.59 delivery fee and a $15 order minimum.
• Domino’s advertising a $9.99 deal while hiding an $18 minimum and a $4.99 delivery charge.

Class actions against Buffalo Wild Wings, Chipotle, Chick-fil-A, Panera and others tell a similar story.

Any rule the FTC adopts should cover all deceptive fees charged in connection with online food delivery – whether those fees are imposed by a third-party platform or by the restaurant or retailer itself.

The bottom line

The principle at the heart of this rulemaking is simple – that (hungry) consumers deserve to know what they will actually pay before they commit to a transaction. TINA.org strongly supports the FTC’s decision to pursue a rule and urges the agency to make it comprehensive, enforceable and broad enough to address the full scope of the problem.