D.C. Attorney General Karl Racine filed a lawsuit against on-demand delivery company Instacart on Thursday, alleging that the San Francisco-based company charged Washingtonians millions of dollars in deceptive fees and failed to pay D.C. sales taxes.

The lawsuit accuses the company of failing to clearly disclose to customers that optional “service fees” were added to their orders over an 18-month period. Racine’s office says this led customers to incorrectly believe that the fees were tips for delivery workers.

“Instacart tricked District consumers into believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” the attorney general says in a statement.

In its app, Instacart previously had a tip option that defaulted to 10% of the customer’s subtotal at checkout, according to Racine’s office. When the company changed that option to a service fee in 2016, the fee defaulted to 10%, although it could have been changed or waived.

At the time, Instacart said that “100% of the variable service amount is used to pay all shoppers more consistently for each and every delivery, not just the last shopper to touch the order.”

But Instacart customers were actually paying another fee — on top of a delivery fee — to cover the company’s costs, and this did not increase shoppers’ pay, says the complaint. Racine’s office also alleges that Instacart did not clearly inform customers on the app’s checkout screen that the service fee was optional.

In April 2018, after media reports about the fee and outreach from the attorney general’s office, Instacart implemented a mandatory service fee but purportedly refused to refund customers for the previous, optional service fees.

In the lawsuit, which was filed in D.C. Superior Court, the District also alleges that Instacart failed to collect hundreds of thousands of dollars in required sales taxes on service and delivery fees “during the entire time it has transacted business” in the city. Racine’s office is requesting restitution for customers who paid the service fees; back taxes and interest; and civil penalties.

In a statement, Instacart says the complaint’s claims are “without merit.” “We’re disappointed with today’s action by D.C. Attorney General Racine’s office and we welcome the opportunity to continue an open dialogue on these matters,” the company adds.

According to Instacart, its app discloses that tips are separate from service fees, and that service fees go toward its operations. “Additionally, 100% of customer tips always go to Instacart shoppers,” says the company.

Last fall, Racine’s office filed a similar complaint against San Francisco-based food-delivery company DoorDash for allegedly misleading customers by collecting money for workers’ tips, and then putting it toward workers’ base pay. While DoorDash had changed its tipping policies earlier in the year, following media reports, the lawsuit remains pending in D.C. Superior Court.

Instacart formerly operated with the same tipping model, but, like DoorDash, has since changed its policies. Earlier in 2020, workers called on Instacart to increase its default tip amount, which is currently 5%. The company defended that rate as an appropriate amount.

This post has been updated with comment from Instacart.