The District of Columbia has settled a lawsuit against Grubhub for $3.5 million, alleging that the firm deceived consumers by adding hidden surcharges to their bills. A press statement states that Grubhub will pay DC $800,000 in civil penalties and “will refund back to impacted consumers” the remaining $2.7 million.
DC Attorney General Karl Racine sued Grubhub in March, claiming the company deceived consumers by advertising “free” online purchases and “unlimited free delivery” for Grubhub Plus members. The complaint claims the practise is “deceptive” since Grubhub still charges a service cost for orders that aren’t picked up, even for Grubhub Plus members, and charges delivery and service fees for regular orders.
It also mentions numerous other dubious business practises, such as Grubhub’s recent habit of grouping service fees and sales taxes into a single line on the checkout page. There were allegations that Grubhub had added eateries to its platform without their knowledge or consent, and that it had created microsites that looked like those of actual restaurants in order to redirect traffic there. Grubhub denied the allegations and said that “many of the activities at issue had been abandoned” when the lawsuit was first filed.
Grubhub spokeswoman Liza Dee told The Verge, “Settling this case is in the best interest of our company and the issue is now addressed.” Several measures have been implemented to increase pricing transparency, as Grubhub is “dedicated to assisting all businesses and guests.”
Anyone who “paid a minor order or service charge on an order made through the Grubhub Platform” at a DC-based restaurant between January 1, 2016, and December 31, 2022 is eligible for a reimbursement from Grubhub as part of the settlement. The affected consumers will be divided into three categories according to their frequency of platform usage, with the first group receiving at least $4.50, the second group receiving at least $7, and the third group receiving at least $10. If the credit is not used within 90 days, Grubhub will mail the account holder a check for the unredeemed balance.
In order to make a buck more, Grubhub uses deceptive advertising and sneaky surcharges.
The platform must also make other adjustments, including discontinuing or transferring ownership of the DC-specific microsites it created for eateries, clearly notifying consumers of any extra costs at checkout, and placing each charge on its own line. Grubhub must now declare when the pricing for specific menu items are greater than what are advertised at restaurants themselves, and must cease advertising “free delivery” to Grubhub Plus customers. Grubhub has committed to “offer further clarification for our guests and thousands of restaurant partners,” according to a new blog post on the company’s website.
“Grubhub used every trick in the book to manipulate customers into paying far more than they owed, and even worse, they did so at the height of a global pandemic when District residents were already struggling to make ends meet,” Racine says in a statement. “Grubhub’s hidden fees and misleading marketing tactics were designed to get the company an extra buck at the expense of DC residents but we’re not letting them get away with it.”
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