DC sues GrubHub hidden fees: The District of Columbia Attorney General, Karl Racine, issued Grubhub for deceptive business practices, alleging that its food delivery app inflates prices for diners who use it. It seeks monetary restitution and civil penalties to end a laundry list of allegedly illegal practices.
This lawsuit alleges that Grubhub’s promises of “free” online orders – and “unlimited free delivery” for Grubhub Plus – are misleading. The company offers pickup orders for free but charges delivery and service fees for standard orders and Grubhub Plus orders. Until recently, the service fee was displayed as part of a single line with sales taxes. “Grubhub deceived District residents and exploited local restaurants to boost profits even as District consumers and small businesses struggled during the COVID-19 outbreak,” Racine said. GrubHub charged hidden fees and used bait-and-switch marketing tactics – which is illegal.”
It argues that Grubhub orders often cost more than similar items
ordered at a restaurant and says it does not disclose this to consumers. “Because Grubhub charges several different kinds of fees for its services … consumers expect the Grubhub menu prices to match the ones on the restaurant’s website or at the restaurant,” the complaint says.
Several news outlets have reported that Grubhub has also listed restaurants without their permission to expand its service, routing their orders through its service and taking a commission. According to the complaint, the company listed “over a thousand” restaurants in DC that had no relationship with the company, causing orders to take longer to fill, be incorrectly supplied, be delivered cold, or eventually be canceled.”
GrubHub, which operates Seamless and several other food delivery apps, has also made more elaborate attempts to incorporate itself into restaurant transactions. According to the lawsuit, it launched unsanctioned microsites that looked like official restaurant websites and custom phone numbers that let it charge fees when customers call restaurants, even if no orders were placed. In addition, the company offered a “Supper for Support” promotion that required restaurants to pay for a special discount; after backlash, it offered restaurants $250 in compensation.
GRUBHUB INSISTS IT HASN’T MISREPRESENTED any hidden FEES
The company said it would fight the lawsuit and that many of the practices it describes have been disclosed appropriately or discontinued. “We have engaged in a constructive dialogue with the DC attorney general’s office since last year to help them better understand our business and see where improvements can be made,” said Katie Norris, director of corporate communications. We are disappointed to hear that they have moved forward with this lawsuit since our practices have always been compliant with DC law, and in any case, many of the rules at issue have been discontinued. In court, we will vigorously defend our business and look forward to continuing to serve DC restaurants and diners.”
The company says its app no longer lists restaurants that aren’t members, and it’s removing microsites and its Supper for the Support program. As part of its terms of service, it says it will clarify that only pickup orders are free when ordering directly from the restaurant. “Grubhub has not misrepresented its fees,” it states.
While Grubhub isn’t the only delivery app charging higher fees that customers aren’t aware of, it’s not the only one under fire legally. Chicago sued Grubhub and DoorDash last year on the same grounds, and the city published a revised complaint the previous month. Meanwhile, Grubhub and other delivery app companies have sued cities over fee caps implemented during the COVID-19 pandemic – which they’ve called a legal overreach.