Instacart Replaces Tips With “Service Amounts,” But Are Workers Being Stiffed?

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Since its launch in 2012 Instacart has offered consumers a way to shop at their local grocery store without actually going to the store. Instead, hired shoppers would be sent a list of products, grab them off shelves, and drive them to a customer’s home or business where they often — but not always — receive a tip. But starting next month, the company is changing the way it handles tips, leaving some contractors and customers up in arms.

Instacart announced last week that starting in mid-October it would no longer collect tips online, but would collect a service amount from customers instead.

The company says that customers can choose how much of a service amount they want to provide and Instacart will then pass those funds along to its contractors — the driver or shopper handling orders.

Instacart claims that the change was intended to create “more consistent pay with fewer variables” and provide “higher guaranteed delivery commissions.”

TechCrunch reported that Instacart COO Ravi Gupta characterized the change as providing drivers with somewhere around $10-$12 per delivery, rather than the current $5/delivery plus tips.

• Instacart Drivers & Shoppers: Tell us what you think about this change. Send an email to Tips@consumerist.com. We will not identify you publicly.

While the increase seems pretty straightforward, shoppers and drivers have expressed concern that the new service amount wouldn’t actually go to just the driver responsible for the trip, but be split between all of those working for the company.

One recent blog post argues that the language used by Instacart is vague about who exactly receives the new not-a-tip.

The article includes a screengrab of a note sent to Instacart workers about the change. In response to the question “Who receives the service charge?” Instacart claims that 100% of the money goes to shoppers, but that the fee is spread out among the entire fleet of shoppers; not just the ones at a particular store or in one region.

Critics of the change question whether this is an appropriate way to allot this additional charge.

“Sure, the driver or shopper you just interacted with did get some money—but not directly,” writes Piss.io’s Jon Hendren. “It’s folded into part of the flat, standard fee, and that’s it.”

Without directly acknowledging the claims in that particular article, Instacart today posted a response to critics, maintaining that the change will indeed benefit its workers.

“Ever since we announced that we’re going to make changes to our shopper payment model, we’ve heard some misconceptions that we want to address,” the company says.

First, the company says that all of the funds provided in a service amount will go to shoppers/drivers. The company also clarified why it made the change and that Instacart will not keep and of those funds.

Instacart says that under the previous model it noticed that about 20% of the customers did not tip at all. And, around 40% of the customers tipped provide very small tips, around less than $2.

“This was a problem because shoppers were reliant on tips as a major source of pay,” the company writes. “At Instacart, we believe that shoppers should not have to rely on tips and instead just make fair, guaranteed and predictable pay. So, we decided to change that.”

The company provided an example of the pay change for a driver in San Francisco:

screen-shot-2016-09-29-at-2-49-56-pm

Additionally, Instacart says it will provide the top 25% of all shoppers with a $100 weekly bonus based on their five-star ratings.

In the end, the company claims that a driver in San Francisco could earn between $15 and $20/hour of work.

• Instacart Drivers & Shoppers: Tell us what you think about this change. Send an email to Tips@consumerist.com. We will not identify you publicly.

Instacart Renames Tips To “Service Amounts,” Keeps Them [Piss.io]
Instacart raises guaranteed delivery payout rates, removing tipping option [TechCrunch]
Clearing Misconceptions About the Shopper Payment Model [Instacart]
We’re Making Updates To Improve Our Shopper Experience [Instacart]