Throughout the pandemic, delivery food orders have skyrocketed in popularity as many individuals can enjoy their meals in the safety of their homes. During these times, food delivery companies have greatly profited, some even taking advantage of the large surge of customers. Grubhub, in particular, has made a lot of its revenue from secretly inflating prices and adding many unnecessary fees to customer orders. Because of the wrongful activity the Grubhub company has been perpetuating, Washington DC decided to sue Grubhub. For example, Grubhub offered delivery for over 1,000 restaurants without the consent of the restaurant owners. Here are a large number of reasons Grubhub was sued and also major points that were included in the lawsuit:
Many of the fees included in Grubhub’s orders were misrepresented and higher than necessary. The prices were not discussed between Grubhub or any of the restaurant owners, allowing the delivery company to grossly profit from their corrupt practices. The unauthorized fee structures allowed Grubhub to take advantage of local restaurants even while these small businesses struggled during the pandemic. Grubhub didn’t disclose these terms to the restaurant and didn’t give them the option to decline participation in this promotion. The terms didn’t state that restaurants weren’t financially obligated for the discounts, making this incredibly unfair for restaurants.
Grubhub passed on the cost of discounts to the restaurants during a promotion that was supposed to support restaurants. This campaign was called Supper for Support to help local eateries during the pandemic. Instead of the restaurants benefiting, Grubhub didn’t pay the full difference and was able to profit more than the restaurants themselves. This was done by keeping all of the delivery and marketing charges while charging consumers a reduced price.
Grubhub further harmed restaurants’ ability to profit by advertising free services that weren’t exactly free. For example, it advertised free online ordering but didn’t say that it applied only to pick-up orders. Customers who wanted a delivery had to pay a fee. They also promoted unlimited free delivery for Grubhub+ subscribers but didn’t mention that there is a service fee for all deliveries. The service fee was hidden inside the tax charges at the checkout.
In addition to unclear and false advertising, Grubhub also charged far higher prices for menu items. These terms also weren’t discussed with restaurant owners and have added to 30% or more on the menu item’s original price. This may supposedly include delivery costs, driver tips, sales tax, and other expenses unknown to customers. They have been secretly profiting off of thousands of restaurants whose menus were included without their consent, in addition to altering the price of the food available.
Grubhub has also been performing predatory practices by creating fake websites so that they can increase their commission fees. The company was able to charge anywhere between 3% to 15% based on whether the restaurant had its own delivery drivers. While customers believed they were ordering directly from the restaurants and avoiding paying Grubhub fees, they were ordering from a site owned by Grubhub that mimicked the original restaurant. The landing pages for these official businesses were designed similarly that it was hard for customers to know they weren’t ordering from the restaurant. The fact that Grubhub is a parent company for multiple food services made it more difficult for customers to detect.
Other unlawful practices included the listing of deceptive routing phone numbers. This increased Grubhub’s commission because the phone numbers often charged the caller a fee. To make matters worse, even if the customer didn’t order anything, they were still charged a fee for calling Grubhub’s number.
Instead of admitting to these harmful activities, Grubhub was disappointed that Washington DC wanted to move forward with the lawsuit. Grubhub mentioned that they would defend their business and continue to serve restaurants. This is even though many of the restaurants didn’t authorize being catered to by Grubhub’s services. The lawsuit is still pending, and the total amount being demanded in the lawsuit is currently not released to the public, but many restaurants are awaiting the decision. After many customers have been misled and the deceptive practices continue, the number of damages might be vast.