DC attorney general orders DoorDash to cut commission in subscription program -source

A DoorDash billboard is pictured in Times Square on the day they hold their IPO in the Manhattan borough of New York City, New York, U.S., December 9, 2020. REUTERS/Carlo Allegri

NEW YORK (Reuters) - District of Columbia Attorney General Karl Racine sent DoorDash Inc a letter ordering it to immediately cease and desist a policy of charging restaurants a 30% commission on each order in its DashPass subscription product, a person familiar with the matter said on Wednesday.

In the letter, which was sent to DoorDash on Tuesday, such a commission would be a violation of the DC code, which caps such commissions at 15% for third party food delivery platforms.

DoorDash said it recognized there had been confusion as a result of its response to the consequences of the pricing regulations in DC.

“While DashPass is a premium marketing offering and provides benefits to many restaurants, we have decided to not charge DC restaurants their contractual DashPass rate at this time. We look forward to engaging with local policymakers to increase understanding of the impact pricing regulations have, and solutions that better serve customers, Dashers, and restaurants,” a DoorDash spokeswoman said in a statement.

The letter comes after DoorDash last month reached a $2.5 million settlement with the DC attorney general for allegedly misrepresenting that customers tips would go to food delivery drivers.

DoorDash is set to make its New York Stock Exchange debut later on Wednesday having sold shares on Tuesday in its initial public offering above its upwardly revised target range to raise $3.37 billion.

Reporting by Karen Freifeld in New York; Additional reporting by Joshua Franklin; Editing by Chris Reese