Grubhub reaches settlement with FTC over adding restaurants without their approval

Grubhub agreed to pay $25 million to settles down Charges from the Federal Trade Commission (FTC) and the Illinois Attorney General. The company has been accused of a laundry list of shady behavior, including misleading customers about delivery fees, deceiving delivery drivers about income, and listing restaurants on the platform without approval. last month, Food delivery startup Wonder bought Grubhub For a tenth of what it was worth during the pandemic.

Under the proposed settlement, Grubhub would have to make changes to address the problems. The requirements read like a “stop doing it” list, one for each charge. This includes notifying customers of full delivery costs, being honest with drivers about payment, and only listing restaurants with their approval.

The FTC says that Grubhub, to appear more powerful than it was, added as many as 325,000 unaffiliated restaurants to the platform without permission since at least 2019. Customers ordering from those companies discovered additional fees and “several ordering issues.” Meanwhile, the agency says restaurants “have borne the brunt of diners’ anger,” damaging their reputations and losing money.

The company also allegedly added unwanted fees after advertising to customers that they would pay a flat, low-cost price for the deliveries. The FTC says Grubhub classified it as a “service fee” or “small order fee,” but it was just a delivery fee under another name. The agency quoted a former Grubhub executive who described it as a “pricing game.”

The FTC also accused the company of blocking customers’ accounts with large gift card balances, leaving them no way to regain access. The agency said that customers who complained to the company were either not informed that their accounts were blocked or were not given any meaningful way to object to the ban.

The false wage claims include advertising that Grubhub drivers can earn up to $40 per hour in the New York area. In fact, the average driver’s wage in that area was about $10 per hour — and only 0.1 percent of drivers reportedly met the advertised rate. In Chicago, one ad promised earnings of up to $26 an hour when the average was $11.

GroupPop Denies allegations but says she’s settled on putting the matter behind him. “At Grubhub, we are committed to transparency so that every day diners, restaurants, and drivers can make informed choices to do business with us,” the company wrote in a statement. “While we categorically deny the allegations made by the FTC, many of which are false, misleading, or no longer applicable to our business, we believe settling this matter is in Grubhub’s best interest and allows us to move forward.”

“Our investigation found that Grubhub deceived its customers, defrauded its drivers, and unfairly harmed the reputation and revenues of restaurants that did not partner with Grubhub — all in order to increase volume and accelerate growth,” FTC Chair Lena M. wrote. statement. “Today’s action holds Grubhub accountable, puts an end to these illegal practices and secures nearly $25 million for people defrauded by Grubhub’s tactics. There is no ‘party platform’ exception to the laws on the books.