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Senators ask FTC to investigate Instacart over 'tip baiting'

They want protections against customers who stiff couriers.
Jon Fingas, @jonfingas
May 29, 2020
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CLARK, NEW JERSEY - APRIL 27: Clark resident Jen Valencia (C) shops for a customer as she supplements her income working for Instacart at Acme Market on April 27, 2020 in Clark, New Jersey. Instacart has experienced a massive surge in customer demand and employment recently due to lockdowns and other restrictions caused by COVID-19. (Photo by Michael Loccisano/Getty Images)
Michael Loccisano/Getty Images

Tip baiting, where delivery service customers promise generous tips to couriers only to stiff them afterward, is a scummy practice — and politicians want to know if companies are letting it slide. A group of US senators led by Brian Schatz have sent a letter to FTC Chairman Joseph Simons asking him to start an investigation into whether Instacart and other delivery firms are conducting “unfair or deceptive” practices by allowing tip baiting. It’s important that these companies be “fair and transparent” with workers, the senators said, especially when many couriers are gig workers who don’t have labor protections.

Schatz and his fellow senators also sent a letter to Instacart chief Apoorva Mehta asking him to change the tipping policy to prevent baiting.

Instacart characterized these abuses as rare in a statement to Engadget, saying that tips stay the same or climb higher for “99.5% of orders” and that tip-based earnings have “nearly doubled” since the COVID-19 pandemic started. You can read the full statement below. The company didn’t directly address instances where tip baiting has happened or say if it would adjust behavior. It does have a few mild measures in place to discourage zeroing out tips, however, such as forcing customers to manually set the tip to $0 and setting the default to at least 5 percent even if it was lower for the last order.

It’s a complex situation. The ability to change tips after delivery is commonplace among grocery and restaurant delivery apps, and is meant to protect customers against shoddy service. Instacart shoppers, for example, are theoretically more likely to treat you well if they know you could reduce their tip. However, many of these app-based workers also depend on tips to make a decent living — the absence of a guarantee for their tips could leave them in financial distress. If the FTC intervenes, it may have to strike a careful balance where it both protects workers and gives customers a way to address poor service.

“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. Additionally, since the beginning of the COVID-19 outbreak in North America, shoppers' earnings from tips have nearly doubled. Tips are always separate from any Instacart earnings and all tips go directly to the shopper.”

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