Democratic senators urge regulators to investigate Instacart over ‘tip baiting’

A group of Democratic senators on Friday sent two letters raising concerns over the tipping system for grocery delivery service Instacart.

In a letter to the company, the lawmakers were critical of the service allowing buyers to promise large tips and then reduce them after the orders are completed, a practice known as “tip baiting.”

“People are facing unprecedented economic hardship because of the COVID-19 pandemic and so we hope online delivery companies like yours are taking the necessary steps to protect shoppers and prevent unfair and deceptive practices,” the lawmakers, led by Sen. Brian Schatz (D-Hawaii), wrote to Instacart founder and CEO Apoorva Mehta.

In a separate letter to the Federal Trade Commission (FTC), the lawmakers urged the agency to investigate the tipping system for being “misleading and unfair.”

“Particularly in light of the COVID-19 pandemic and the unique risks that online delivery shoppers are taking, we believe the tipping policy at Instacart and other similar companies deserve scrutiny,” the senators wrote to FTC chairman Joseph Simons.

Democratic Sens. Sherrod Brown (Ohio), Chris Van Hollen (Md.) and Elizabeth Warren (Mass.) joined Schatz on both letters.

A spokesperson for Instacart told The Hill later on Friday that tip baiting is a rare occurrence on the platform, pointing to data about tip rates during the pandemic.

“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,” they said.

“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.”

Multiple reports have outlined concerns from shoppers about tip bating amid the pandemic as demand for grocery delivery has exploded.

Instacart and other delivery services have seen boosted business as states and cities recommended individuals stay home to slow the spread of the coronavirus.

The company has hired tens of thousands of gig workers since the start of the pandemic and plans to triple its workforce this year.

Updated at 1:39 p.m.