Grubhub Inc. has agreed to pay $25 million to resolve allegations of deceptive business practices with the Illinois attorney general and the Federal Trade Commission.
The investigation, led by Illinois Attorney General Kwame Raoul, was initiated in response to numerous consumer complaints against the 20-year-old food ordering and delivery platform.
The big picture: Grubhub was accused of tricking customers, deceiving drivers, and unfairly harming the reputation and revenues of restaurants that did not partner with them, all in a bid to drive growth and scale, as stated by FTC chairperson Lina M. Khan.
- The settlement will consist of a $24.8 million restitution payment from Grubhub, with an additional $200,000 allocated to fund consumer education and enforcement efforts led by the attorney general’s office.
Go deeper: The investigation uncovered that Grubhub engaged in unlawful practices such as misleading customers about delivery costs, misrepresenting the benefits of Grubhub subscriptions, deceiving drivers about earnings potential, and listing restaurants without their knowledge or consent, sometimes against their objections.
What they’re saying: Grubhub has denied any wrongdoing and emphasized its commitment to transparency in business practices, stating that they cooperated with the FTC throughout their multi-year review.
- “While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward,” Grubhub said in a statement.
What we’re watching: As part of the settlement, Grubhub has agreed to implement platform changes aimed at improving transparency for customers regarding fees and clarifying potential earnings for delivery drivers.
- Additionally, Grubhub is required to promptly remove unaffiliated restaurants from its listings, as mandated by the settlement agreement.
- Although the exact number of consumers who may benefit from the settlement payout is yet to be determined, the FTC plans to develop a remediation plan once the agreement receives court approval.
