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Grubhub pays $25 million for allegedly tricking customers and lying to drivers
Food delivery service Grubhub has agreed to pay a hefty sum of $25 million to settle a Federal Trade Commission (FTC) lawsuit alleging that the company 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 significant changes to their platform. One of these changes includes clearly displaying the total delivery cost when orders are placed by customers. Additionally, the FTC claims that Grubhub falsely advertised “highly inflated hourly pay rates for drivers” and hid the true cost of its services by adding delivery fees that increased the final order price.
The agency also accused Grubhub of advertising lower delivery fees to attract more customers, only to add a “service” fee that ultimately raised the cost of orders. Furthermore, it is alleged that Grubhub charged customers hidden fees, resulting in higher total order prices.
In another alleged violation, Grubhub Plus members were charged for delivery despite being advertised as having “free” or “$0” deliveries. The FTC also claimed that Grubhub makes it easy to sign up for the plan but difficult to cancel while allegedly blocking accounts of users with large gift card balances.
As part of the settlement, Grubhub is required to show customers the full cost of delivery and cannot add “junk fees” to orders. It will no longer be allowed to list unaffiliated restaurants on its platform, and must provide evidence-backed claims about driver earnings in writing.
Furthermore, the company must notify customers when their accounts are banned and offer a means to appeal the decision. Grubhub is also tasked with making it easier for users to cancel Grubhub Plus subscriptions.
Grubhub’s response to the settlement was somewhat defensive, as spokesperson Najy Kamal stated that “we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business.” However, they acknowledged that settling the matter is in the company’s best interest and will allow them to move forward.
The $25 million settlement will be used to refund affected customers.
Source: www.theverge.com
