Grubhub Settles FTC and Illinois Attorney General Charges for $25 Million
Grubhub has reached a $25 million settlement with the Federal Trade Commission (FTC) and the Illinois Attorney General after facing accusations of deceptive practices. The company was alleged to have misled customers on delivery charges, deceived delivery drivers on earnings, and listed restaurants on its platform without their consent. This settlement comes after Wonder, a food delivery startup, acquired Grubhub at a significant discount from its pandemic value.
As part of the settlement, Grubhub is required to make changes to address the issues raised. The mandated actions aim to rectify the deceptive practices highlighted in the accusations. These include transparently communicating full delivery costs to customers, providing accurate information on driver pay, and obtaining consent from restaurants before listing them on the platform.
The FTC revealed that Grubhub had added up to 325,000 unaffiliated restaurants to its platform without authorization since 2019. Customers ordering from these restaurants faced additional fees and encountered numerous ordering issues. This led to reputational harm and financial losses for the affected restaurants. Additionally, the agency accused Grubhub of misleading customers by applying undisclosed fees on top of advertised flat-rate delivery charges.
Furthermore, Grubhub was accused of blocking customers’ accounts with substantial gift card balances, leaving them unable to access their funds. The company allegedly failed to inform customers of the account block or provide a means to challenge the decision. The false earnings claims made to drivers were also highlighted, with discrepancies between advertised rates and actual median earnings.
While Grubhub denies the allegations, the company opted to settle to move forward. In a statement, Grubhub emphasized its commitment to transparency and serving the best interests of all stakeholders. FTC Chair Lina M. Khan reiterated the importance of holding Grubhub accountable for its practices and ensuring compliance with the law.
In conclusion, Grubhub’s $25 million settlement resolves the accusations of deceptive practices and aims to address the concerns raised by the authorities. The company is expected to implement changes to enhance transparency and rectify the issues identified in the investigation.
Source link
