Online food-ordering platform Grubhub has agreed to pay $25 million to settle accusations made by the Federal Trade Commission (FTC) and Illinois Attorney General Kwame Raoul.
The complaint concerns allegations of fraudulent activities, such as increasing delivery prices and misleading customers and employees.
Key Allegations Against Grubhub
The FTC and Illinois officials alleged Grubhub engaged in several deceptive practices:
- Inflated Delivery Costs: The corporation allegedly deceived clients about the true cost of deliveries by charging unannounced costs known as “junk fees.”
- Unauthorised Restaurant Listings: Grubhub allegedly placed eateries on its site without their permission, leading users to believe the venues had associated with the company.
- Worker Deception: The platform exaggerated the earnings potential of delivery drivers.
- Blocked Account Access: Without clear communication, several consumers experienced account limits and difficulty accessing their funds.
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Settlement Details
- Monetary Penalty: A total judgement of $140 million was issued, although Grubhub only has to pay $25 million owing to financial limits.
- Terms of Settlement: Grubhub must clearly disclose delivery prices to clients.
- Remove any hidden fees from orders.
- Notify clients if their accounts have been blocked.
- Stop listing unaffiliated establishments on their platform.
- Conditional Full Payment: If Grubhub is proven to have misrepresented its financial situation, the entire $140 million judgement will be payable immediately.
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Grubhub’s Response
In a statement, a company spokesperson denied the allegations but indicated that settling was in Grubhub’s best interest:
“While we categorically deny the allegations made by the FTC, many of which are wrong, misleading, or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward.”
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Consumer Relief and Business Accountability
Illinois Attorney General Kwame Raoul emphasized the importance of the resolution:
“This settlement ensures transparency for consumers and relief for those misled by Grubhub’s practices. I thank FTC Chair Lina Khan for another successful partnership that benefits Illinois residents.”
The settlement also mandates the company introduce new practices to improve transparency, benefiting both customers and restaurants.
What’s Next for Grubhub?
Grubhub is scheduled to update its pricing and fee disclosures.
- Ensure greater communication between customers and eateries.
- Avoid repeating the misleading activities that resulted in this settlement.
- This case highlights the increased scrutiny of technology-driven service platforms, with calls for accountability and fairness in their business operations.
