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Instacart says it mistakenly withheld tips from some of its workers

It also overcharged some customers.

Instacart shopper walking Instacart
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Instacart’s tumultuous relationship with the workforce that picks and delivers groceries to the company’s customers just took another hit.

The $4 billion grocery-delivery startup admitted in a blog post on Friday that it had mistakenly withheld tips from some of its workforce, and failed to waive service fees in some instances when its customers requested to.

Instacart blamed the errors on a technical “bug, related to product updates made at the end of 2017,” co-founder and CEO Apoorva Mehta said in the post.

“We sincerely apologize for this and we are committed to doing better going forward,” he said.

The company said it would pay out the tips to affected workers, refund customers who had waived a service fee that was still charged and provide both constituencies with itemized lists of the affected orders. The company said the glitch “impacted less than 1 percent of Instacart orders during this time period.”

I’ve asked Mehta for an explanation of how they discovered the bug, as well as the total value of withheld tips and wrongly charged service fees. I’ll update this post if I hear back.

The news comes about a year after Instacart workers were in an uproar over changes that made it much harder for them to receive tips. The company implemented a service fee in late 2016 that it said it would disburse to its workforce in an attempt to even out pay between its lowest and highest earners.

It initially removed the tipping option as part of this change, before relenting and adding it back. But when it did, it made the tipping feature much harder to find. It has since made it more prominent and has made changes to how it describes the service fee after settling a class-action lawsuit for more than $4 million.

But over the last few months, workers occasionally complained of missing tips on internet forums where Instacart workers congregate. Some also spoke of Instacart customers who said they waived the “service fee” — which Instacart allows — only to find that they it had still been charged to their order. It turns out this was the case.

Instacart, founded in 2012, has increasingly become the No. 1 ally of grocery store chains in their battle with retail giants like Walmart and Amazon. Following Amazon’s purchase of Whole Foods, the startup signed new delivery pacts with giant grocery holding companies Albertsons and Kroger and expanded deals with Costco and CVS.

Whole Foods was an investor in Instacart and its largest customer.

Instacart employs a mix of full-time and contract workers who pick grocery orders off the shelves inside the stores of partnering grocers and deliver those goods to customer doors. But frequent changes to this workforce’s pay structure has sown distrust among swaths of Instacart workers.

Today’s revelation may not help.

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