Grubhub sued for alleged ‘misleading behavior’ and prices during pandemic

Grubhub used “deceptive business practices” at the expense of consumers and businesses amid the COVID-19 pandemic, a new lawsuit claims.

The lawsuit, filed by Washington, DC Attorney General Carl Racine on March 21 against Grubhub Holdings Inc. and Grubhub Inc., alleges that the popular food delivery and software company hiked prices in order to negatively affect Washington, DC residents. Alleged hidden fees. Service. It also claimed that Grubhub tried to take advantage of local restaurants during the COVID-related lockdown, apart from violating consumer protection laws.

In July 2021 the state of Massachusetts filed a similar claim against Grubhub, alleging that restaurants were charged restaurant fees that exceeded 15 percent of the menu value of an order.

A Florida-based pizzeria also leveled allegations against Grubhub, making several TikTok videos claiming that his business was added to their platform without permission. As a result, there was no trial.

A lawsuit alleges that popular food delivery and software company, Grubhub, hiked prices and hidden fees to negatively impact Washington, D.C. residents during the COVID-19 pandemic. A Grubhub delivery driver walks past Times Square in New York City on December 16, 2020.
Alexey Rosenfeld / Getty Images

The DC suit is intended to force Grubhub to end its allegedly illegal practices, while increasing transparency about where to order food and how to help local businesses.

“Grubhub misled District residents and leveraged local restaurants to boost their own profits, even as District consumers and small businesses struggle during the COVID-19 pandemic,” Racine said in a statement, “Grubhub charged hidden fees and used bait-and-switch advertising tactics – which are illegal. On top of that, the company tricked users with a promotion that supported local restaurants during the pandemic. claimed to have done.”

Racine said that Grubhub “cut the profit margins of struggling restaurants while padding Grubhub’s bottom line,” adding that consumers “don’t mind” for delivery fees but alleging that Grubhub originally said Wasn’t honest about the fee.

Andrew Kline, general counsel for the Restaurant Association of Metropolitan Washington, said he supported Racine’s lawsuit because “while third-party delivery services can be important partners of restaurants, they should neither exploit the public nor exploit those businesses.” What they do is make misleading statements and unfair trade practices.”

The lawsuit claimed Grubhub made $1.8 billion in revenue in 2020, but a Grubhub spokesperson wrote newsweek That “this frivolous lawsuit” and its total revenue is wrong. He said the company had a net loss of $155.9 million in 2020.

“Delivery Logistics” [dispatching and paying drivers, our delivery and driver technology, etc.] There is substantial cost,” the spokesperson said. “Grubhub supported our restaurant partners with hundreds of millions of dollars in 2020 through marketing support, low commissions, and bonuses and personal protective equipment for drivers.”

The lawsuit included a lawsuit against Grubhub of allegations that the company listed more than 1,000 DC restaurants on its software platform, “without the consent of those restaurants in fact, and a lack of sufficient disclosure of their relationship to consumers.” Without doing so, there was no contractual relationship with Grubhub. With those restaurants.”

Grubhub’s response was that it does not list restaurants on its website or app where there is no agreement in line with district law.

The suit also alleges that Grubhub advertised prices on its website and app higher than what consumers are charged on those restaurants’ own websites or in-store menus—and caused such “discrepancies.” was not sufficiently disclosed.

A Grubhub spokesperson said the company has included a disclosure in its terms of use and going forward, the check-out flow prior to placing an order will include a disclosure that “prices may be lower in store.”

It is also alleged that the fee, described as “a bait-and-switch scheme” in the suit for Grubhub for misrepresenting costs to consumers, “appears to have been made at the checkout page after consumers have already invested.” Until the end of the ordering process” was not properly disclosed. their time searching for a restaurant and selecting the menu items they want to order.”

Such fees mentioned include service charges and small-order fees.

But Grubhub argued there was no misrepresentation, saying that all diners agreed to the company’s terms of use — including a disclosure on potential charges related to goods and services — before ever using the platform.

“All fees are disclosed in the order/checkout flow, in order confirmation receipts and in marketing materials,” a Grubhub spokesperson said. “Going forward, Grubhub will individually list each applicable fee on the checkout page and provide diners with details of the fee. No fee will be combined with any other fee.”

Grubhub customers still paying service fees after receiving “unlimited free delivery” as Grubhub customers charge remaining in the lawsuit; a separate commission for routing telephone numbers and charging partner restaurants; Grubhub created websites, or “microsites”, that were designed to look like restaurants’ own official websites; And ads for the platform’s “Supper for Support” promotion during the COVID-19 pandemic have actually negatively impacted restaurants, who have to “bear the full cost of the discount” in addition to covering the Grubhub commission on the full non-discounted price. Needed to do” total food.

Grubhub claims that it discloses the existence of additional fees for Grubhub+ orders in its app, Terms of Use, and in other advertisements such as email footnote disclosures; The lawsuit states that Grubhub solved the telephone routing practice; that it created the website and registered domains on behalf of the restaurant as another source of orders “to increase their online brand presence” – at no charge to the restaurant for creating or maintaining the website; And that the “Supper for Support” promotion, though no longer in existence, did “many things to support residents and restaurants throughout the pandemic in DC and across the country” and that those terms were “for restaurants explicitly Revealed.”

“We work hard to support DC restaurants and diners, and we continually review and grow our operations to better serve them and meet their expectations,” the spokesperson said. “Over the past year, we have sought to engage in constructive dialogue with the DC Attorney General’s office to help them understand our business and to see if there were any areas for improvement.

“We are disappointed that they have moved forward with this lawsuit because our practices have always complied with DC law, and in any event, many practices have been closed over this issue,” he continued. “We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.”

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