Grubhub will pay $25 million to settle a lawsuit from the Federal Trade Commission and Illinois Attorney General Kwame Raoul over unlawful practices, including misleading customers about delivery costs, deceiving drivers about potential earnings, and listing restaurants on its platform without their permission.
The agencies claim that Grubhub hid the true cost of its delivery services, resulting in a final price that was often double what was originally advertised due to “service fees” or “small order fees.” They also claim Grubhub’s ads inflated hourly pay rates well above what drivers would realistically earn.
In addition, Grubhub had as many as 325,000 unaffiliated restaurants on its platform, which the FTC says led to significant harm to both the unaffiliated restaurants and customers.
Under the proposed settlement, Grubhub is being required to stop these practices. Grubhub said in a statement that “while we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward.”
