The District of Columbia is suing Grubhub for deceptive trade practices, alleging that the food delivery company has exploited both customers and restaurants — sometimes even under the guise of helping them.
Filed in the Superior Court of the District of Columbia on Monday, the suit accuses Grubhub of multiple violations of D.C.'s Consumer Protection Procedures Act. This legislation is designed to protect consumers, and prohibits deceptive business practices.
"Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic," said Attorney General Karl A. Racine in a statement. "Grubhub charged hidden fees and used bait-and-switch advertising tactics — which are illegal."
According to the lawsuit, Grubhub engaged in eight misleading and deceptive practices. This laundry list of alleged violations includes:
Listing thousands of restaurants on its platform despite not having entered into a contract with them, and without their consent. The suit claims this results in incorrect information in the listings, as well as a higher likelihood any orders will be unfilled or unsatisfactory.
Listing higher menu prices on Grubhub than the same items direct from the restaurant, and failing to disclose this despite customers' expectations that they would be the same.
Failing to disclose Grubhub's "service fee" and "small order fee" until the end of the ordering process, misleading customers into believing they will only be charged a "delivery fee." Grubhub also previously combined these previous two fees into one line item marked as "taxes."
Advertising that customers can "order online for free," despite this not being the case unless they pick up the order themselves.
Advertising that subscription service Grubhub+ gives customers "unlimited free delivery" on eligible orders, despite subscribers still having to pay a "service fee" for deliveries.
Generating phone numbers for some contracted restaurants and listing them on their pages, giving the impression they were the businesses' direct numbers. Grubhub then tracked orders placed by calling these numbers and charged the restaurants a commission on them. However, the suit does note that Grubhub no longer does this.
Creating websites that look as though they are contracted restaurants' official sites, and failing to disclose that they're actually run by Grubhub. Attempting to order through these websites redirects the customer to Grubhub, making it seem as though going through Grubhub is the only way to order from these businesses.
Marketing Grubhub's "Supper for Support" initiative as a way for customers to support local businesses during the COVID-19 pandemic. This promotion gave customers $10 off their order when they spent over $30 at participating restaurants between certain hours. However, the restaurants themselves were the ones eating the cost of the discount, and still had to pay Grubhub's full commission on the non-discounted price of the food. (Grubhub subsequently paid $250 each to these restaurants after public backlash.)
"[T]he company deceived users with a promotion that claimed to support local restaurants during the heart of the pandemic," said Racine. "But in reality, this program cut into struggling restaurants' profit margins while padding Grubhub’s bottom line."
The suit requests a jury trial, and seeks orders prohibiting Grubhub from engaging in false, misleading, or deceptive practices, as well as damages, penalties, and costs.
It isn't a good look. In response to Mashable's request for comment, Grubhub claims that points 2 to 6 were appropriately disclosed in its Terms of Use or About section — though it's debatable how "appropriate" this was considering it's known that most people don't read these wordy pages. Grubhub also notes that it has discontinued the rest of the questionable practices listed in the lawsuit, though this means they were actually in effect.
"We work hard to support DC restaurants and diners, and we continually review and enhance our operations to better serve them and meet their expectations," a Grubhub spokesperson told Mashable ."During the past year, we've sought to engage in a constructive dialogue with the DC Attorney General’s office to help them understand our business and to see if there were any areas for improvement. We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC law, and in any event, many of the practices at issue have been discontinued. We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners."
The District's lawsuit comes less than a year after Chicago brought a case against Grubhub over many of the same issues, from running official-looking restaurant websites to its allegedly misleading "Supper for Support" initiative. Grubhub was also accused of taking a greater commission on orders than permitted under Chicago's pandemic relief rules. The case is still ongoing.
UPDATE: Mar. 23, 2022, 9:49 a.m. This article has been updated with comment from Grubhub.
