Grubhub agrees to pay $25 million over allegations of deceptive business practices affecting customers and delivery drivers.

Posted: 12:22 PM PST · December 17, 2024

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Grubhub Settles Lawsuit Over Unlawful Practices

Grubhub has agreed to pay $25 million to settle a lawsuit filed by the Federal Trade Commission (FTC) and Illinois Attorney General Kwame Raoul over allegations of deceptive practices against customers and drivers. The settlement comes after the agencies claimed that Grubhub engaged in unlawful activities, including:

Misleading Customers About Delivery Costs: Grubhub allegedly hid the true cost of its delivery services, resulting in a final price that was often double what was originally advertised due to ‘service fees’ or ‘small order fees.’
Deceiving Drivers About Potential Earnings: The agencies claim that Grubhub’s ads inflated hourly pay rates well above what drivers would realistically earn.
Listing Restaurants on the Platform Without Their Permission: As many as 325,000 unaffiliated restaurants were listed on Grubhub’s platform without their consent, causing harm to both the unaffiliated restaurants and customers.

Background Information

The lawsuit filed by the FTC and Illinois Attorney General Kwame Raoul alleged that Grubhub engaged in deceptive practices against customers and drivers. The agencies claimed that Grubhub:

Failed to Disclose True Delivery Costs: Grubhub allegedly failed to disclose the true cost of its delivery services, resulting in a final price that was often double what was originally advertised.
Inflated Hourly Pay Rates for Drivers: The agencies claim that Grubhub’s ads inflated hourly pay rates well above what drivers would realistically earn.
Listed Restaurants on the Platform Without Their Permission: As many as 325,000 unaffiliated restaurants were listed on Grubhub’s platform without their consent.

The Proposed Settlement

Under the proposed settlement, Grubhub is required to:

Stop Misleading Customers About Delivery Costs: Grubhub must stop hiding the true cost of its delivery services and clearly disclose all fees associated with delivery.
Disclose True Earnings for Drivers: Grubhub must accurately represent hourly pay rates for drivers in their ads.
Obtain Permission from Restaurants to List Them on the Platform: Grubhub must obtain explicit permission from restaurants before listing them on its platform.

Grubhub’s Response

In a statement, Grubhub said that "while we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward."