Grubhub to Pay $25M for Deceptive Practices

Grubhub Settlement with FTC and Illinois Attorney General

Grubhub has agreed to a $25 million settlement to resolve a lawsuit brought forth by the Federal Trade Commission and Illinois Attorney General Kwame Raoul.

The legal action centered on a series of alleged unlawful business practices employed by the food delivery service.

Details of the Allegations

The core of the complaint involved accusations of misleading customers regarding delivery expenses.

Specifically, the agencies allege that Grubhub concealed the complete cost of delivery, leading to final charges that frequently exceeded the initially displayed price by a factor of two.

This discrepancy was attributed to the addition of “service fees” and “small order fees” that were not prominently disclosed.

Driver Earnings Misrepresentation

Furthermore, the lawsuit claims that Grubhub’s advertising materials misrepresented potential earnings for its drivers.

Advertised hourly pay rates were allegedly inflated, significantly exceeding the realistic income drivers could expect to receive.

Unauthorized Restaurant Listings

A significant portion of the case concerned the listing of restaurants on the Grubhub platform without their explicit consent.

As many as 325,000 unaffiliated restaurants were reportedly included, causing detriment to both the restaurants themselves and Grubhub’s customers.

Terms of the Settlement

The proposed settlement mandates that Grubhub cease the practices outlined in the complaint.

In a public statement, Grubhub maintained its denial of the allegations, characterizing many as “wrong, misleading or no longer applicable.”

However, the company stated that settling the matter was deemed the most advantageous course of action for its future operations.