Postmates may get the shady company of the year award on this one. It what seems many are frustrated with the apps lack of transparency when it comes to hidden service fees. Postmates seemed like a great idea at first. The app allows customers to easily order any item from any restaurant or store including Starbucks and have it delivered to their doorstep in less than an hour.
Postmates will give customers $100 in free deliveries to start out or let you sign-up for their unlimited delivery with no fees attached but both still include hidden service fees. While these fees are not new to the Postmates app they have been steadily increasing from pennies to over $7 in some cases on top of the delivery fees. The on-demand delivery service charges a total of three fees including “delivery”, “service”, and a “small plate fee” if the order is less than $14.
Users on Reddit and other community forums are complaining over the rise of the service fee saying that its a “Scam”. Let us repeat again that the service fee is not considered the delivery fee that the on-demand app charges. People are starting to notice that the service fees went from 9% to 12.99% to now an unknown variable rate which averages at technically 22% because they charge the fee of the subtotal plus the tax. Yes, your taxes are included in both the tip that you provide in the app and the service fee.
How does Postmates determine the Delivery Fee?
According to Postmates the fees help pay for your Postmate’s time and keep the whole operation running smoothly, so you can get whatever you need quickly and conveniently. They add that the Postmates Delivery Fee is a flat rate of $5.99, however we can currently bring you orders from our Partners at an even lower rate: $3.99! Additionally, a variable percentage based service fee is applied to the purchase price of your items. During peak times, delivery prices may surge* (or Blitz). Surge pricing creates a strong financial incentive for Postmates to make themselves available when you need them most.
The Estimated Total Doesn’t Always Show
They claim that you will always be notified of your Delivery Fee on the checkout screen before requesting a Postmate. That opens up another can or worms because no charges are listed if you wish to make a customized order such as adding a plate to a listed restaurant that has no price until completed or adding a restaurant not listed in the app. Of course on this delivery you do not get a warning of a service fee nor do you get a warning of a small plate fee (order under $14).
What is the Service Fee?
The Postmates service fee is a variable percentage based fee applied to the purchase price of your items. You will be able to verify the service fee for your order on the checkout screen ONLY on orders that are not custom orders such as when you add a restaurant not listed in the app or a plate that is not listed. To find the fee it is normally under the Subtotal and you have to click on an information icon (i) on the order summary screen to find it. It used to be listed under Taxes and Fees not just Fee so it was even more misleading.
All of this should alarm consumer advocates and consumers to look more closely at these types of hidden fees. Postmates could face legal problems and settlements if this continues. One consumer frustrated with being blasted with these fees:
I have been a big customer of Postmates and have referred many of my friends to the app so when I figured out that I have been cheated on 80% of my orders in the past year with hidden fees I am shocked and feel deceived. I have also participated in many promos where they have a “free” delivery then I look back after the fact and notice a “service fee”. That is not a free delivery. These service fees have added up to over $400 extra. This was misleading because most of my orders did not state the price as it was a customized order and I had no idea about the service fees. I did know about the small plate fee a few times after the fact but the service fee on top of a delivery fee, and a small plate fee is unacceptable. They also hide the fee under taxes with a (i) that you must click on in the app to see the “service fee”. This fee hides as the tax. I have been wondering why the taxes for my orders have been so much and after investigating this issue it has been concluded that the “service fee” is the reason for this. – Postmates User
One example of this service fee on top of a $5.99 delivery fee is of $3.46 for a plate of tacos that would only cost $17.27 in person. Here is the receipt below of the cost without using the on-demand app:
As you can see the taxes are included in this receipt and the Postmates app deception of including a Taxes and Fee area (before they moved to just Fee) was particularly questionable.
Restaurant Servers Do Not Get Tipped (Mostly)
Keep in mind these service fees do not go towards tips for the bartender or service industry working hard to make sure the order is ready to be picked up. Customers place orders through the Postmates app, which includes a delivery charge and a varying fee based on distance for everyone else) and a flat 9 percent “service charge.” The delivery fee is split 80/20 between the driver and Postmates, respectively. Most people would logically assume that the 9 percent service fee goes to the hardworking people slathering mayonnaise on your sandwich. Sadly, they would be wrong. According to Postmates spokesperson April Conyers, that fee goes to “the company and is applied toward operations.”
To sum it all up we expect answers from the Postmates On-Demand delivery app and hope they respond to this issue. They can do this by possibly refunding customers they have mislead and make the app more transparent when charging for fees instead of having different groups of fees. When you order a delivery you should have a delivery fee and a tip.
