Grubhub is being sued by the District of Columbia Attorney General Karl Racine on the basis of deceptive business practices. Saying its food delivery app clandestinely inflates prices for diners who order through it. The suit demands an end to a laundry list of allegedly illegal practices along with financial restitution as well as civil penalties.
The newly filed lawsuit states that the company’s promises of “free” online orders as well as “unlimited free delivery” for Plus as misleading. While customers have the ability to make pickup orders for free, the company does charge delivery as well as service fees for standard orders along with service fees for Grubhub Plus orders. While displaying the service fee until recently as part of a single line with sales taxes. “Grubhub misled residents. The company took advantage of local restaurants to boost profits. Even as District consumers, as well as small businesses, struggled during the COVID-19 pandemic.” Said Racine in a statement. “Grubhub charged hidden fees. The company used bait-and-switch advertising tactics, which are illegal.”
Why are the food prices high on Grubhub?
The complaint says Grubhub orders generally cost more than ordering the same item at a restaurant. It argues that the company fails to reasonably disclose this to consumers. “The company charges its customer’s several different types of fees for the services. Consumers expect the menu prices listed on Grubhub are the same prices offered at the restaurant. Or, the prices on the restaurant’s website,” the complaint says.
Grubhub’s non-legal practices.
As previously reported by news outlets, Grubhub has also listed many restaurants without their permission to expand its service, routing orders through its services as well as taking a commission. The complaint states that it listed “over a thousand” restaurants in DC that had no connection with them. Asserting that the unapproved listings often contained menu errors, it also resulted in orders that would “take longer to fill, would be filled incorrectly, would be delivered cold. Or the orders would eventually be canceled altogether.”
The lawsuit notes the launch of unsanctioned microsites that appear to be the official restaurant sites. As well as custom phone numbers that let it charge fees when customers call restaurants, despite the fact that the calls didn’t result in orders. The company offered a “Supper for Support” promotion that required restaurants to foot the bill for a special discount. The company offered restaurants $250 in compensation after a backlash.
Grubhub indicated that it would fight the lawsuit, it also said many of the practices it describes are either appropriately disclosed. Or, they have been discontinued. “This past year, we strived to engage in constructive communication with the DC attorney general’s office. To help them understand our business as well as to see if there were any areas for improvement,” said Katie Norris to The Verge. She is the director of corporate communications. “We are disappointed they went ahead with the lawsuit. As our practices have always complied with the DC law. And in any event, a lot of the practices at issue have been discontinued. We will aggressively defend our business in court, we look forward to continuing to serve DC restaurants as well as diners.”
Grubhub’s statement says the app no longer lists restaurants that haven’t agreed to work with them. It has retired its microsites as well as the Supper for the Support program. It also includes disclosures in its terms of use, though “moving forward,” will more prominently tell users that the prices might be lower when ordering directly from the restaurant. It will specify in marketing that only the pickup orders are free. “Grubhub did not misrepresent the fees,” the company says.
Grubhub is not the only delivery app that charges higher fees that customers aren’t necessarily aware of, nor is it the only one that has come under legal fire. Last year, the city of Chicago sued both Grubhub along with DoorDash on similar grounds, it publicized an amended complaint last month. Conversely, Grubhub as well as other delivery app companies have sued cities for fee caps implemented during the pandemic. Which these companies have termed as a legal overreach. If you liked this article (or if it helped at all), leave a comment below or share it with friends, so they can also know DC sues Grubhub, claiming the app is full of hidden
