Grubhub, a popular food delivery app, has agreed to pay a $25 million settlement after a federal investigation revealed that the company engaged in deceptive practices towards customers, drivers, and restaurants.
Food delivery app Grubhub has agreed to pay $25 million after a federal investigation found that the Chicago-based company tricked its customers, misled its drivers, and damaged the reputation of some restaurants that didn't partner with them. Grubhub said they 'categorically deny' the allegations made by the Federal Trade Commission and Illinois Attorney General's office, but they believe it is in the best interest of the company to pay the money and move forward.
The FTC and Raoul's office accused Grubhub of making millions of dollars and gaining an unfair advantage in the online food delivery marketplace through deceptive practices. 'For years, Grubhub deliberately and systematically cheated its customers, deceived its drivers, and undermined restaurants that did not partner with Grubhub,' FTC Chair Lina Khan said. A federal lawsuit filed by the FTC and Raoul's office accuses Grubhub of baiting with low delivery fees, only to tack on additional fees often labeled as 'service fees' or 'small order fees' that were simply delivery fees in disguise. Grubhub was also accused of misleading users about its Grubhub+ subscription service, claiming it offered free delivery, while still charging subscribers for delivery, and making it difficult to cancel Grubhub+ subscriptions. The FTC and Raoul's office also found that Grubhub exaggerated how much drivers could make working for the food delivery app. According to the lawsuit, Grubhub advertised that its drivers were likely to earn $26 per hour, when the vast majority never received that much. In reality, the complaint claims the median Grubhub driver earned $11 per hour in 2023, and only the top 2% of drivers earned the promised hourly pay. 'Despite knowing from its own data that the vast majority of delivery drivers were not making anywhere near the claimed hourly rates, Grubhub continued to run advertisements with unsubstantiated hourly earnings claims,' the lawsuit states
Grubhub Delivery Fees Deceptive Practices Drivers Customers
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