Grubhub, the food delivery giant, has agreed to pay $25 million in a settlement with Attorney General Kwame Raoul and the Federal Trade Commission (FTC) after being accused of deceptive business practices. The settlement includes restitution to consumers, reforms to how the company operates, and an agreement to halt the practices in question. According to a press release by the Illinois Attorney General's office, the investigation into Grubhub launched following a myriad of complaints from dissatisfied customers.
Of the settlement, a substantial $24.8 million is earmarked for customers nationwide who were taken in by Grubhub's misleading practices. "I thank FTC Chair Lina Khan for another successful partnership between our offices that has resulted in relief for Illinois consumers, and I remain committed to holding businesses like Grubhub accountable for their deceptive business practices," Raoul said, indicating the extent to which Attorney General's office went to actively pursue justice. FTC Chair Lina Khan added that Grubhub "tricked its customers, deceived its drivers, and unfairly damaged the reputation and revenues of restaurants," emphasizing the multi-tiered harm caused by the company's tactics.
The investigation unearthed that Grubhub perpetrated a variety of deceptive acts, including misleading consumers about delivery costs and the benefits of the Grubhub Plus subscription, providing inaccurate information to drivers about potential earnings, and listing restaurants on their app without permission – sometimes countering the restaurants’ explicit requests to be removed. The settlement forces Grubhub to quickly stop listing unaffiliated restaurants and prohibits them in the future from adding restaurants without permission.
Additional measures imposed by the settlement require Grubhub to transparently disclose all fees and the cumulative cost to consumers from the start. Moreover, the company must provide verifiable proof to substantiate any earnings claims it makes to drivers. The $25 million agreement also allocates $200,000 to support the Illinois Attorney General’s efforts in consumer education and enforcement work. Raoul's Consumer Fraud Bureau, led by Consumer Protection Division Chief Susan Ellis and others, was pivotal in bringing this settlement to fruition.
Grubhub's ascent in the gig economy, like many disruptors before it, demonstrates the critical need for vigilance and robust consumer protection laws to ensure fairness. With new stipulations in place, Grubhub is to more transparently conduct business, embodying the principle that growth should not come at the cost of ethical practice. For affected consumers looking for restitution or further details on the settlement, they can refer to official statements and documents provided by the Illinois Attorney General’s office.
