Grubhub Inc., a prominent online food delivery and ordering service, has agreed to pay a substantial sum of $25 million to resolve allegations of misleading business practices brought forth by the Illinois attorney general and the Federal Trade Commission (FTC). The announcement was made on Tuesday.
Attorney General Kwame Raoul initiated a thorough investigation into Grubhub after he received numerous consumer complaints regarding the company’s operations, which span over 20 years. This inquiry involved collaboration with the FTC to arrive at a nationwide settlement agreement.
FTC Chairwoman Lina M. Khan highlighted that Grubhub’s actions misled customers, deceived its drivers, and negatively impacted the reputation and revenue of restaurants that were not affiliated with the platform. These tactics were allegedly employed to gain more business and accelerate the company’s growth trajectory.
As part of the settlement, Grubhub will allocate $24.8 million for consumer restitution, while the remaining $200,000 will support the attorney general’s initiatives in consumer education and enforcement. According to officials, the investigation uncovered that Grubhub had engaged in several illegal practices. These included misleading customers about delivery costs and subscription benefits, providing false earnings potential to drivers, and listing restaurants on its app without their consent, sometimes even contrary to their wishes.
In response to the allegations, Grubhub has denied any wrongdoing. The company stressed its dedication to transparency and cooperation with the FTC during the course of their extensive review. They issued a statement asserting that while they deny the FTC’s claims—characterizing many of them as incorrect, misleading, or outdated—settling the issue is deemed to be in Grubhub’s best interest to facilitate future growth.
Moreover, as part of the settlement conditions, Grubhub will implement changes to its platform to enhance clarity surrounding fees and improve communication regarding driver earnings. Raoul noted that the settlement also mandates the immediate removal of any unaffiliated restaurants from Grubhub’s listings.
The FTC has yet to determine the number of consumers who could benefit from the settlement payout. Once the court approves the agreement, the agency will formulate a remediation plan to address the situation.
