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Grubhub to pay $25M for ‘deceptive’ practices against customers, drivers
In a move aimed at settling allegations of deceptive business practices, Grubhub has agreed to pay $25 million to resolve claims from the Federal Trade Commission (FTC) and Illinois Attorney General Kwame Raoul. According to reports, the company’s settlement comes as a result of its alleged misleading advertising and unfair treatment of both customers and drivers.
The controversy surrounds Grubhub’s deceptive marketing tactics, which included hiding true delivery costs by adding “service fees” or “small order fees.” This allegedly resulted in final prices that were often double the initially advertised amount. Additionally, the company is accused of inflating hourly pay rates for its drivers, promising significantly higher earnings than they could realistically expect to make.
Furthermore, Grubhub is alleged to have listed numerous restaurants on its platform without their permission, leading to harm for both these businesses and consumers. The FTC claims that this practice, which involved as many as 325,000 unaffiliated restaurants, caused significant harm to all parties involved.
As part of the settlement agreement, Grubhub has committed to cease such practices moving forward. While the company initially denied many of the allegations made by the FTC, it ultimately chose to settle in order to avoid further legal action and potential reputational damage.
“We categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business,” Grubhub stated in a press release. “However, we believe settling this matter is in the best interest of Grubhub and allows us to move forward.”
Source: techcrunch.com
