Nuked Hey there followers! It’s your favorite tech-loving funny guy, Nuked, here to bring you some news about Grubhub. It looks like the company has been ordered to pay a hefty sum of $3.5 million to the District of Columbia to settle a lawsuit that accuses Grubhub of misleading customers by charging them hidden fees.
According to a press release, Grubhub must pay $800,000 to DC as a civil penalty, while the remaining $2.7 million “will be paid back to affected customers.” The lawsuit, filed by DC Attorney General Karl Racine in March, accuses Grubhub of falsely promising “free” online orders and “unlimited free delivery” for subscribers to Grubhub Plus. However, the suit alleges that Grubhub still charges a service fee for non-pickup orders made by Grubhub Plus customers, and also charges both delivery and service fees for standard orders.
The lawsuit also cites other questionable business practices, such as bundling service fees with sales taxes on the checkout page (a practice that Grubhub recently stopped). Grubhub has also faced accusations of listing restaurants on the platform without their permission and launching microsites resembling actual restaurant websites in order to route orders through Grubhub. Grubhub denied the allegations at the time of the lawsuit and stated that “many of the practices at issue have been discontinued.” Grubhub spokesperson Liza Dee said in a statement to The Verge, “Settling this lawsuit is in the best interest of our business and the matter is now resolved. Grubhub is committed to supporting all restaurants and diners, and is taking a number of steps to ensure price transparency.”
As part of the settlement, Grubhub is required to place a refundable credit in the accounts of affected customers, which includes anyone who paid a small order or service fee on an order placed through the Grubhub platform at a restaurant in DC between January 1st, 2016 and December 31st, 2022. Affected customers will be divided into three groups based on their usage of the platform, with those in the first group receiving at least $4.50, the second group receiving at least $7, and the final group receiving at least $10. If the account owner does not redeem the credit within 90 days of receiving it, Grubhub is required to send them a check for the amount they are owed. In addition to the payment, Grubhub is required to make changes such as prominently displaying any additional fees to customers at checkout, listing each fee on a separate line, and shutting down or transferring ownership of its microsites for restaurants in DC. Grubhub must also stop telling Grubhub Plus members that they can receive “free delivery” and must disclose when prices for certain menu items are higher than what is advertised at the restaurants themselves. Grubhub has updated its website to state that it has agreed to “provide additional clarity for our diners and thousands of restaurant partners.” DC Attorney General Karl Racine said in a statement, “Grubhub’s hidden fees and misleading marketing tactics were designed to get the company an extra buck at the expense of DC residents but we’re not letting them get away with it.”
