Senators call for FTC investigation into Instacart tip baiting after CNN Business report

By Tori 3 years ago

Last month, CNN Business reported that some Instacart customers were bait-and-switching workers by offering up a large tip — as high as $50 or more — and then taking it away after the grocery delivery was completed.

On Thursday, a letter signed by Sens Brian Schatz, Elizabeth Warren, Sherrod Brown and Chris Van Hollen was sent to the Federal Trade Commission asking the agency to scrutinize the tipping policy at Instacart and other similar companies.

“People are facing unprecedented economic hardship because of the COVID-19 pandemic and so it is more important than ever that we protect people from unfair and deceptive practices,” read the letter, a copy of which was shared in advance with CNN Business. “At a time when Instacart shoppers are most vulnerable, Instacart’s service is allowing customers to deceive and shortchange shoppers.”

In a similar letter sent to Instacart, the senators wrote that they “welcome hearing from you about how Instacart is responding to these reports of ‘tip baiting,’ and what steps the company is taking to protect shoppers during this challenging time.”

The FTC confirmed that it received the letter, but said it had no other comment. When asked about the letter, Instacart told CNN Business that the vast majority of people adjust their tip upward or do not adjust their tip at all after delivery.

“Our goal is to deliver a high-quality experience for both customers and shoppers. By allowing customers to tip after delivery based on their overall service, we see shopper tips increase or stay the same on 99.5% of orders,” an Instacart spokesperson said in a statement. “Additionally, since the beginning of the COVID-19 outbreak in North America, shoppers’ earnings from tips have nearly doubled.”

After the CNN Business report, Instacart made no changes to its tipping policy. It continues to give customers the ability to change a tip for up to three days, including cutting it down to $0. As a spokesperson previously told CNN Business, the company recently removed the “none” tip option for people, so users who want to tip nothing must manually change a tip to $0. The spokesperson said this could deter users from doing so.

Being able to change a tip is not uncommon for on-demand delivery platforms. But other services such as Uber Eats and Postmates, which offer on-demand meal deliveries, allow customers to change tips for shorter windows of time, between one and 10 hours.

Demand for grocery delivery has skyrocketed during the coronavirus pandemic, prompting Instacart to hire hundreds of thousands more workers. At times, many customers have struggled to place orders for items they want or even get a time slot for delivery due to the high level of demand.
An Instacart worker previously told CNN Business tip baiting was “very demoralizing.”


A whistleblower holding an envelope.

“I don’t pretend to be a hero, like a nurse in a hospital … but I literally am exposing myself [to coronavirus] and when I return home, exposing my own family to the possibility of transmitting this disease. When you know that it’s somebody who’s just doing it to game the system and to get their order when they want it. It’s really frustrating,” Instacart worker Annaliisa Arambula said at the time of CNN Business’ first report.

While Instacart is benefiting from a surge in customer orders in recent months, workers have criticized the company for not doing enough to ensure they’re adequately protected and paid during the pandemic. Workers have participated in strikes against Instacart, including demands such as hazard pay and a default tip of 10%. Instacart previously said it would change its default tip setting from 5% to the most recently used percentage a customer chose to tip.
As the senators indicated in the letters, online delivery companies have faced backlash over the years for how they’ve handled compensating workers. Instacart faced criticism for the way it handles tips before the pandemic, as workers said some tips added by customers were being used to subsidize a minimum pay rate instead of being treated as bonuses. In response, Instacart said in February 2019 that it would make changes and apologized for its approach.

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