in ,

District of Columbia sues Grubhub for hiding fees and not disclosing higher charges

Grubhub has landed itself a lawsuit by the District of Columbia for its opaque business practices. The company is being asked to make restitution and pay penalties.

Attorney General of the District of Columbia, Karl Racine, has dragged Grubhub to court for its practice of subtly inflating prices for users that order food through the app. The lawsuit seeks to make Grubhub stop a list of illegal practices.

The AG alleges that Grubhub has engaged in misleading advertising with its promise of free online orders and unlimited free delivery with its Grubhub Plus plan. The fact was that Grubhub allowed users to make pickup orders for free but charges for delivery and service fees on standard orders and Grubhub Plus orders. However, the company used to hide the service fee inside sales taxes until recently.

“Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic. Grubhub charged hidden fees and used bait-and-switch advertising tactics — which are illegal,” Racine said.

The lawsuit further states that Grubhub often charged more than ordering directly from the restaurant, a fact the company did not adequately disclose to its users. “Because Grubhub already charges consumers several different types of fees for its services … consumers expect that the menu prices listed on Grubhub are the same prices offered at the restaurant or on the restaurant’s website.”

The complaint also included the fact that Grubhub listed many restaurants without their permission and took a commission. More than a thousand restaurants in the District of Columbia that have no connection with Grubhub are listed. This leads to menu errors and delays in filling orders or mistakes. Sometimes, the food would grow cold or the order canceled altogether.

Grubhub also went as far as creating illegal micro-websites made to look like the restaurants’ official ones. It also used custom phone numbers that billed customers when they called restaurants even though they didn’t end up making orders.

Grubhub also ran a Supper for Support promotion, which required the restaurants to bear the costs, but it backtracked and offered $250 in compensation after a backlash.

Meanwhile, Grubhub has said it would fight the lawsuit, even though it admitted it did as charged in the past. Katie Norris, director of corporate communications, said to The Verge, “During the past year, we’ve sought to engage in a constructive dialogue with the DC attorney general’s office to help them understand our business and to see if there were any areas for improvement. We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC law, and in any event, many of the practices at issue have been discontinued. We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.”

Norris claimed Grubhub had stopped listing restaurants without their consent. It had also discontinued the microsites and Support for Supper. The company also plans to inform its users that they might pay more than ordering from the restaurant. In addition, the marketing materials will make it clear that only pickup orders are free.

Despite all the concessions, Grubhub insisted it had not misrepresented its fees.

Meanwhile, Grubhub is facing a similar suit in Chicago, although DoorDash is also targeted. 

Written by HackerVibes

Ford’s F-150 Lightning confirmed to offer 320 miles while GM starts production of the Cadillac Lyriq way ahead of schedule

Rivian R1T vs Tesla Cybertruck; which electric pickup truck should you buy?