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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 was accused of a range of questionable practices, including adding restaurants to its platform without their consent, as well as deceiving customers about delivery costs and driver pay.
According to the FTC’s allegations, Grubhub listed up to 325,000 unaffiliated restaurants on its platform without permission since at least 2019. This led to a range of problems for both customers and the affected restaurants, including the addition of unexpected fees and “numerous ordering problems.”
The agency also accused Grubhub of misrepresenting the costs of delivery, charging customers for services they did not receive. The company allegedly labeled these fees as “service fees” or “small order fees,” but in reality they were simply delivery charges under a different name.
In addition to these allegations, the FTC charged that Grubhub blocked customer accounts with large gift card balances, leaving them without access to their funds. Diners who complained about this practice were allegedly not informed of the account block or given any meaningful way to contest it.
Grubhub was also accused of misrepresenting the pay potential for its delivery drivers. The company advertised that drivers could earn up to $40 per hour in New York and $26 per hour in Chicago, but an investigation found that only a tiny fraction of drivers actually earned those rates. In reality, median driver pay in these areas was significantly lower.
Grubhub has denied all allegations, stating that the charges are “wrong, misleading or no longer applicable to our business.” However, the company has chosen to settle the matter, agreeing to make changes to its practices and pay $25 million in fines.
The settlement requires Grubhub to notify customers of full delivery costs, be transparent with drivers about their pay, and only list restaurants on its platform with their explicit consent.
Source: www.engadget.com
