Food Delivery Giant Grubhub Faces Heat for Deceptive Practices
Settlement Reached with FTC and Illinois Attorney General
In a major blow to Grubhub, the food delivery platform has agreed to settle with the U.S. Federal Trade Commission (FTC) and Illinois Attorney General Kwame Raoul over allegations of misleading customers, adding restaurants without consent, and deceiving drivers about pay. The settlement comes with a hefty price tag of $25 million, significantly lower than the initial $140 million judgment sought by the agencies.
Misleading Customers and Restaurants
According to the lawsuit, Grubhub engaged in several deceptive practices, including hiding fees until the last minute, misleading Grubhub+ subscribers about avoiding fees, and blocking customers from using their gift card balances. These actions resulted in order delays, customer complaints, and harm to both restaurants and diners.
Deceiving Drivers About Pay
Grubhub was also accused of misrepresenting pay to its drivers, claiming they could earn up to $26 an hour. However, the reality was that only the top 2% of drivers achieved those rates. This misleading information led to frustration and disappointment among drivers.
Adding Restaurants Without Consent
In a surprising move, Grubhub added thousands of restaurants to its platform without their consent, resulting in order delays and customer complaints. This practice was deemed a violation of federal and state law.
A Quick Fix or a Long-Term Solution?
While Grubhub has denied the allegations, the company has agreed to cease these practices and pay the settlement amount. However, if Grubhub is found to have misrepresented its financial position, the full penalty will apply. The settlement raises questions about the company’s commitment to transparency and fairness in its business practices.
Moving Forward
A Grubhub spokesperson stated that settling the matter is in the best interest of the company, allowing them to move forward. However, the incident serves as a reminder of the importance of accountability and transparency in the food delivery industry. As consumers, it’s essential to remain vigilant and demand fair practices from companies that serve us.
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