Last year, the New York City Council passed several laws requiring delivery apps like DoorDash and Instacart to prompt users for a tip, and to make the prompts extra visible by making them appear before the completion of the order. Under new Mayor Zohran Mamdani, the city’s Department of Consumer and Worker Protection (DCWP) is pledging to enforce these laws aggressively.
The tipping-prompt mandates are a well-intentioned effort to help gig workers. But they build on prior misguided policies pushed by New York politicians. These latest rules will increase consumers’ tipping fatigue and likely raise food-delivery costs.
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In 2023, the city council created a minimum wage for app-based restaurant delivery drivers. Unsurprisingly, that decision raised the cost of food delivery in New York City. Many companies responded by moving tipping prompts so that they appeared after a delivery order was completed, rather than before. That change was meant to reduce the price shock customers experienced when placing an order.
The city council responded to this shift with new ordinances. These required that app-based delivery companies display a suggested tip amount of 10 percent by default and position the tipping prompt before or at the time the order is placed, rather than afterward. Both measures are meant to increase tips.
Gig companies—including DoorDash, Uber, and Instacart—filed numerous lawsuits to block enforcement of these laws. In January, two federal judges rejected their bids, and the laws went into effect on January 26.
The Mamdani administration has signaled its intent to enforce the laws aggressively. DCWP is led by Samuel Levine, the former director of the Federal Trade Commission’s Bureau of Consumer Protection in the Biden administration. In January, Levine warned gig companies that his agency would “vigorously enforce” the new tipping laws and hold “companies that try to skirt the rules accountable.” DCWP also recently announced legal action against the restaurant-delivery company Motoclick for, among other things, allegedly stealing tips from its drivers.
Around the same time, DCWP released a report accusing gig companies of employing “design tricks,” such as moving tipping prompts within their apps, to reduce worker tips by more than $550 million. According to DCWP, apps with a post-order tip prompt yielded an average tip of 76 cents. The average tip on platforms that did not move their prompts was $2.17.
DCWP’s results are unsurprising. Evidence has long suggested that tipping prompts—especially those with default suggestions—encourage customers to tip more. Including a higher default option creates an “anchoring effect,” which pressures a customer to choose that amount.
These tactics come at a cost, both literally and figuratively. Americans are increasingly frustrated with the phenomenon of “tip creep,” the term used to describe the Covid-triggered proliferation of tipping requests and expectations across all sectors of the economy. Practices like pre-entered tip suggestions draw particular scorn. Research suggests that aggressive tipping prompts may cause some customers to avoid a business altogether.
Thanks to the near ubiquity of tipping prompts, customers are increasingly understanding suggested tip amounts as part of the overall cost of a purchase. That causes them to feel that food delivery has become more expensive, potentially leading to a reduction in orders. When New York City and Seattle raised their minimum wages for app-based delivery drivers, food-delivery costs spiked and orders plummeted. Higher tips will likely have a similar effect.
Customers have traditionally associated pushy tipping prompts with underhanded business tactics designed to “nudge” their behavior or shift labor costs onto consumers. That the government is mandating the practice doesn’t make it any less off-putting—or any less harmful to consumers.
Photo by Michael M. Santiago/Getty Images