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Grubhub has agreed to pay a staggering $25 million to settle a Federal Trade Commission (FTC) lawsuit alleging the food delivery service misled customers and deceived drivers. According to FTC Chair Lina Khan, “Grubhub tricked its customers, deceived its drivers, and unfairly damaged the reputation and revenues of restaurants that did not partner with Grubhub.”
The proposed settlement requires Grubhub to make several significant changes to its platform. These alterations include displaying the total delivery cost when orders are placed by customers. Furthermore, Grubhub will no longer be able to advertise “highly inflated hourly pay rates for drivers,” nor can it hide the true cost of its services.
According to the FTC’s initial complaint, Grubhub began advertising lower delivery fees in 2019 to attract more customers. However, it then proceeded to add a “service” fee that increased the cost of orders, thereby deceiving customers. The agency also claimed that Grubhub charged customers for delivery despite advertising the subscription as having “free” or “$0” deliveries.
The FTC further alleged that Grubhub makes its Grubhub Plus membership plan easy to sign up for but difficult to cancel while also blocking the accounts of users with large gift card balances. Consequently, the company is now required to show customers the full cost of delivery and can no longer add “junk fees” to orders.
Additionally, Grubhub has been prohibited from listing unaffiliated restaurants on its platform, resulting in many customers experiencing issues with their orders and subsequently leaving bad feedback for these unconnected restaurants.
Source: www.theverge.com
