Square’s Caviar agrees to pay $2.2 million to settle class-action lawsuit alleging Caviar’s tipping option was fake

Square, the payments company led by Jack Dorsey, has agreed to pay $2.2 million to settle a class-action lawsuit involving its on-demand food delivery service, Caviar . Today, customers who ordered food from Caviar between January 20, 2012 and August 31, 2015 received a notice of the proposed class-action settlement – this is according to Techcrunch.

The lawsuit was filed in 2016 by Spencer Janssen in California. It says that customers were made to think that the 18 percent “gratuity” charge on each Caviar order would go to the driver, but that “this representation is false.” The complaint alleges that, “No portion of this ‘gratuity’ was provided to the delivery drivers.”

Square has denied the allegations, stating that drivers knew how much they were being paid and that they received their gratuities. Drivers are paid per delivery.

The $2.2 million is to be split up as follows: as much as $755,000 will go toward Janssen’s lawyers, up to $10,000 will go to Janssen, and the remaining $1.44 million will be split among the 93,914 class members, or the customers who paid Caviar, thinking they were paying for drivers’ gratuities. The total should come out to about $15.28 per customer, which would be credited to be used inside Caviar. The settlement still needs to be approved by a judge during a final court session on September 21st.

“We have always properly compensated delivery couriers, and discontinued this practice long ago to provide better transparency around costs. We have chosen to settle this matter to avoid the cost and distraction of litigation and provide direct benefit to our valued customers,” Caviar said in a statement to The Verge.

Caviar has since replaced the gratuities line item with a “service fee,” which sounds like what the gratuity charge was in reality. The app also added a tipping option, but tips have never been required by Caviar, according to its policies.

Square acquired Caviar in 2014 for a reported $90 million in stock, after the allegations in the lawsuit began. In 2016, according to Business Insider, Dorsey turned down a $100 million offer to sell Caviar, and Square recently released point-of-sale terminals for restaurants that come integrated with the delivery service and other elements of its payment ecosystem.

Similar allegations of app operators pocketing money intended for workers have long dogged companies like Uber, which in 2017 agreed to reimburse tens of millions of dollars to NYC drivers after it admitted it miscalculated commissions to its own benefit. Related concerns include using apps to dodge labor protections: Amazon’s convoluted Flex program, which the e-commerce leviathan uses to manage contract deliveries, may amount to a troubling scheme to misclassify workers and distance itself from the labor practices of contracted delivery companies.

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