Drizly app logo is displayed on a mobile phone screen with Drizly website background. Krakow, Poland, on Feb. 5, 2021. (Photo: Beata Zawrzel/NurPhoto via AP)
Drizly, the defunct alcohol delivery platform acquired by Uber in 2021, has been ordered to reimburse unpaid tips to over 8,300 delivery workers across New York state.
On Tuesday, New York Attorney General Letitia James announced that customers were "misled" into giving tips directly to store owners rather than delivery drivers. An AG investigation found that customers were prompted to leave tips for delivery workers, including an automatic 10% tip at checkout. However, over 80% of those tips were reportedly given to liquor store owners, who were then encouraged to distribute funds to their employees without any means of verification.
James says that 8,385 delivery workers at 2,453 stores may have been deprived of tips between 2018 and 2023. Drizly is now being ordered to pay $4 million in restitution to those employees, alongside an additional $200,000 for a settlement administrator to track and disburse the funds.
“Drizly misled its customers by encouraging them to tip and then failing to make sure those tips went to the delivery workers who earned them,” James said in a news release. “So many delivery workers work paycheck to paycheck and denying them their hard-earned tips could mean the difference between making ends meet and not being able to put food on the table. Now, we are finally returning this money to those who actually deserve it and who customers intended it would go to."
It's not the first time that the alcohol delivery platform has found itself in hot water.
Following a near-identical investigation in 2023, Drizly was ordered to pay out nearly $2 million to untipped delivery workers in Washington D.C. A few months earlier, the FTC found that internal security failures led to the leaking of over 2.5 million user's personal information. Drizly was ordered to dish out $7.1 million in a class action settlement, between $1.05 million to $3.15 million of which was paid back to claimants.
At its height, Drizly was the largest alcohol delivery platform in North America. Its red-and-white bear logo was a common sight in over 1,500 cities across the U.S., especially so after a 350% sales surge at the onset of COVID-19. The app was acquired by Uber in 2021 for a reported $1.1 billion, after which sales continued to grow year after year.
Despite continued success, Uber decided to shutter the app in January after it found redundancies between Drizly and its in-house food delivery service, Uber Eats. Uber has since laid off at least 168 Drizly employees from its staff.
[callout-app-promo]
