Grubhub Lawsuit, Grubhub Agrees to Pay $25 Million Over Deceptive Practices
In a historic settlement, Grubhub has agreed to pay $25 million to resolve accusations of misleading customers, deceiving drivers, and unfairly listing restaurants without consent. This settlement, backed by the Federal Trade Commission (FTC) and the Illinois Attorney General, marks a significant step in holding the popular food delivery service accountable for its controversial business practices.
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Allegations Against Grubhub
Grubhub faced serious allegations that it misled both customers and drivers in several key ways:
1. Deceptive Fees and Advertising
The company was accused of failing to disclose all delivery costs upfront, hiding additional fees that made services more expensive than customers expected. Additionally, Grubhub’s marketing of free delivery for its Grubhub Plus members was found to be misleading.
2. Misleading Drivers’ Earnings
Grubhub allegedly misled its drivers by promising earnings that were not achievable, resulting in financial stress for many.
3. Unauthorized Restaurant Listings
The company was accused of listing restaurants on its platform without their consent, leading to poor reviews and confusion among customers who ordered from these unverified establishments.
Settlement Details
1. Financial Penalty
Grubhub has agreed to a $25 million settlement to resolve the case. Of this amount, $24.8 million will be allocated for consumer restitution, and $200,000 will go toward funding educational programs and enforcement operations to prevent future deceptive practices.
2. Required Operational Changes
As part of the settlement, Grubhub must implement several operational changes:
- Full disclosure of all delivery costs at the time of order.
- Removal of non-affiliated restaurants from the platform.
- Clear and verifiable earnings advertisements for drivers.
- A straightforward process for Grubhub Plus customers to cancel their subscriptions.
Grubhub’s Response
While Grubhub denies the allegations, the company has agreed to the settlement in order to move forward and implement these necessary changes to its operations. The settlement represents a significant push to ensure that consumer rights are upheld and that business practices in the food delivery industry become more transparent and fair.
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FAQs
What were the main allegations against Grubhub?
Grubhub faced accusations of misleading customers about delivery fees, making false claims about free delivery for Grubhub Plus members, and misrepresenting driver earnings. The company was also accused of listing restaurants on its platform without their consent, leading to poor reviews and customer confusion.
How much is Grubhub paying to settle the lawsuit?
Grubhub has agreed to pay a total of $25 million to resolve the deceptive practices lawsuit. Of this amount, $24.8 million will be used to compensate affected consumers, and $200,000 will fund consumer education and enforcement operations.
What changes will Grubhub have to make as part of the settlement?
As part of the settlement, Grubhub must:
- Disclose the full delivery cost upfront to customers.
- Stop listing non-affiliated restaurants on its platform.
- Ensure driver earnings are accurately advertised and verifiable.
- Simplify the process for Grubhub Plus members to cancel their subscriptions.
Will Grubhub be punished further?
While Grubhub has agreed to the $25 million settlement, it denies the allegations. The settlement is meant to prevent further deceptive practices and require operational changes, but there are no criminal penalties involved at this time.
How will the $25 million be distributed?
The majority of the settlement funds, $24.8 million, will be used to compensate consumers who were affected by Grubhub’s deceptive practices. The remaining $200,000 will go toward consumer education and efforts to enforce better business practices in the future.
How can I know if I am eligible for compensation?
Consumers who were affected by the deceptive practices of Grubhub will likely be notified through the appropriate channels as part of the restitution process. Keep an eye out for official communications regarding the claims process.
What led to this settlement?
The settlement resulted from a legal investigation by the Federal Trade Commission (FTC) and the Illinois Attorney General’s office into Grubhub’s business practices, which were found to be misleading to both customers and drivers.
What happens if Grubhub doesn’t comply with the settlement terms?
If Grubhub fails to comply with the terms of the settlement, it could face further legal actions, including penalties or additional lawsuits, from regulators like the FTC or the Illinois Attorney General’s office.
Will Grubhub’s business practices improve after the settlement?
The settlement includes operational changes that require Grubhub to be more transparent with its fees, improve communication with drivers, and stop listing unauthorized restaurants, all of which should improve the company’s business practices going forward.
