Grubhub secretly charged fees and misled users in COVID pandemic, lawsuit says
Grubhub charged customers hidden fees, used misleading marketing tactics and “took advantage of local restaurants” that were struggling during the onset of the COVID-19 pandemic, according to a lawsuit filed by Washington D.C. Attorney General Karl A. Racine.
The lawsuit filed Monday, March 21, accuses the third-party delivery company of eight different violations of D.C.’s Consumer Protection Procedures Act, including running false promotions that claimed to support local restaurants, hiding the true cost of delivery orders from consumers and using “bait-and-switch advertising tactics.”
“With this lawsuit, we are seeking to force Grubhub to end its unlawful practices and be transparent so DC residents can make informed decisions about where to order food and how to support local businesses,” Racine said in a statement.
A Grubhub spokesperson said in a statement to McClatchy News that the company has not violated DC law, adding that many of the practices listed in the lawsuit have been discontinued.
In his lawsuit, Racine accuses the company, which operates food delivery services in more than 4,000 U.S. cities, of running a promotion in March and April 2020 that falsely claimed to help restaurants struggling due to indoor dining restrictions imposed at the time.
The “Supper for Support” promotion offered users $10 off of every order of $30 or more. But, according to the lawsuit, Grubhub didn’t fully cover the costs of the discounts and passed much of the burden on to the restaurants.
The company is also accused of forcing restaurants to pay full commission on discounted orders.
”This promotion severely cut into restaurants’ already-small profit margins, and misled DC residents who believed their orders through Grubhub would help their favorite restaurants,” the lawsuit says.
But Grubhub says that all terms of the promotion — which is no longer running — were clearly disclosed to restaurants that chose to participate.
“In addition, diner-facing promotions for Supper for Support in no way stated or implied that participating restaurants were not financially obligated for the discounts,” the statement says. “In promotions moving forward, Grubhub will disclose to diners when a diner promotion is funded by the restaurant.”
The lawsuit also accuses Grubhub of hiding the true cost of delivery orders from consumers and adding fees for service and small orders during the final step of the checkout process.
“This practice constitutes a ’dark pattern’—a design feature that deceives, coerces, or manipulates consumers into making choices that are either not what they intended, or not in their best interests,” the lawsuit says.
Grubhub said all fees are disclosed in the company’s terms of use, which every consumer agrees to before using the platform.
“Going forward, Grubhub will individually list each applicable fee on the checkout page and provide diners with a description of the fee,” the company’s spokesperson said in a statement.
The spokesperson said the company has been in discussions with the DC attorney general’s office over the past year to see how it can improve its practices.
”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,” the statement says. “We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.”
This story was originally published March 22, 2022 at 1:04 PM with the headline "Grubhub secretly charged fees and misled users in COVID pandemic, lawsuit says."