Grubhub to pay $25M to settle claims of tricking customers and drivers
SPRINGFIELD, Ill. (AP) — Grubhub Inc., an online food ordering and delivery platform, will pay $25 million to settle a dispute over alleged deceptive business practices with the Illinois attorney general and the Federal Trade Commission, officials said Tuesday.
Attorney General Kwame Raoul said he launched an investigation into the 20-year-old operation after receiving “dozens” of consumer complaints and engaged the FTC on the nationwide settlement.
“Grubhub tricked its customers, deceived its drivers and unfairly damaged the reputation and revenues of restaurants that did not partner with Grubhub — all in order to drive scale and accelerate growth,” FTC chairperson Lina M. Khan said.
Chicago-based Grubhub, which allows consumers to order delivery from nearby restaurants via drivers contracted with the company, will pay $24.8 million in restitution, while $200,000 will fund the attorney general's consumer education and enforcement operations.
Raoul and Khan said the investigation found that Grubhub engaged in illegal practices by misleading customers about the cost of delivery and the benefits of a Grubhub subscription, deceived drivers about the amount of money they could make, and listed restaurants on its app without their knowledge or consent — and in some cases over their objections.
In a statement, Grubhub denied wrongdoing. It said the company is committed to openness in its practices and said it cooperated with the FTC in its multiyear review.
“While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward,” the statement said.
In addition to the settlement payment, Grubhub said it will make changes to its platform to make it easier for diners to understand fees and to better explain what delivery drivers could earn.
The settlement also requires Grubhub to immediately remove from its listing any unaffiliated restaurants, Raoul said.
The FTC said it doesn't yet know how many consumers may benefit from the payout. After court approval of the agreement, the agency will put together a remediation plan.