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Grubhub Settles with FTC Over Adding Restaurants Without Consent
Food delivery giant Grubhub has agreed to pay $25 million to settle charges brought by the Federal Trade Commission (FTC) and the Illinois Attorney General. The company stands accused of a range of unethical practices, including adding thousands of restaurants to its platform without their consent.
According to reports, Grubhub added as many as 325,000 unaffiliated restaurants to its platform since at least 2019, leading to a number of issues for both customers and the affected businesses. Customers who attempted to order from these restaurants reportedly discovered additional fees and numerous ordering problems.
The FTC alleges that Grubhub’s actions caused harm to the reputations and bottom lines of these unconsenting restaurants. The company has been ordered to make significant changes to its practices in order to settle the matter, including obtaining consent before listing new restaurants on its platform.
In addition to the restaurant consent issue, the FTC also accused Grubhub of engaging in other unethical practices. The agency claims that the company added junk fees to customer orders after advertising low-cost, flat rates for deliveries. These fees were allegedly rebranded as “service fees” or “small order fees,” but were simply delivery charges by another name.
Furthermore, the FTC alleges that Grubhub blocked customers’ accounts with large gift card balances without providing a meaningful way to dispute the decision. This led to customers being unable to regain access to their accounts.
The agency also accused Grubhub of misrepresenting pay rates for its drivers. The company reportedly advertised hourly earnings as high as $40 in New York and $26 in Chicago, but the median driver pay in these areas was actually significantly lower. Only a small percentage of drivers were able to achieve the promised rates.
Grubhub has denied all allegations made by the FTC, stating that it has settled the matter to put the issue behind it. The company emphasized its commitment to transparency and its intention to move forward with the settlement.
However, FTC Chair Lina M. Khan took a stronger stance, calling out Grubhub’s practices as illegal and stating that there is no exemption from laws on the books for “gig platforms.” She noted that the agency’s investigation found Grubhub to have tricked customers, deceived drivers, and unfairly damaged the reputations and revenues of unpartnered restaurants.
Under the terms of the settlement, Grubhub will pay $25 million in restitution to those harmed by its actions. The company has also agreed to make significant changes to its practices in order to avoid similar issues in the future.
Source: www.engadget.com
