Food Delivery Giant Agrees to $25 Million Settlement Over Deceptive Practices
In a major victory for consumers, Grubhub Inc., a leading online food ordering and delivery platform, has agreed to pay $25 million to settle allegations of deceptive business practices. The settlement, announced by Illinois Attorney General Kwame Raoul and the Federal Trade Commission (FTC), brings an end to a lengthy investigation into the company’s operations.
Misleading Customers and Drivers
According to the FTC, Grubhub engaged in a range of illegal practices, including misleading customers about delivery costs and the benefits of its subscription service. The company also deceived drivers about their potential earnings, leading to widespread frustration and mistrust.
Unauthorized Restaurant Listings
In a particularly egregious violation, Grubhub listed restaurants on its app without their knowledge or consent, and in some cases, over their objections. This not only damaged the reputation and revenues of these restaurants but also undermined trust in the platform as a whole.
Settlement Terms
Under the terms of the settlement, Grubhub will pay $24.8 million in restitution to affected consumers. An additional $200,000 will be allocated to fund the attorney general’s consumer education and enforcement operations. The company has also agreed to make significant changes to its platform, including making it easier for diners to understand fees and providing clearer explanations of what delivery drivers can earn.
A Commitment to Transparency
Despite denying any wrongdoing, Grubhub has acknowledged the need to improve its practices and has committed to greater transparency in its operations. The company has cooperated with the FTC throughout the investigation and has pledged to remove any unaffiliated restaurants from its listings immediately.
Next Steps
The FTC will now develop a remediation plan to distribute the settlement funds to affected consumers. While the exact number of beneficiaries is still unknown, the agency is working to ensure that those who were harmed by Grubhub’s practices receive fair compensation.
A Warning to Other Companies
This settlement serves as a warning to other companies that engage in deceptive practices: consumers will not be taken advantage of without consequence. By holding Grubhub accountable, the FTC and Attorney General Raoul are sending a strong message about the importance of transparency and fairness in business.
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