The complaint seeks to end the alleged practices and enforce civil penalties and financial restitution.
Washington D.C.'s Office of the Attorney General recently filed a lawsuit against Grubhub, alleging the third-party delivery company has implemented numerous "unfair and deceptive practices with respect to the advertising and promotion of its services to District of Columbia consumers."
In the recently filed lawsuit, Washington, D.C. criticizes eight of the company’s business practices that are in apparent violation of its consumer protection laws and misled customers with hidden fees and other deceitful tactics.
The lawsuit seeks to end the alleged practices and enforce civil penalties and financial restitution.
The city is accusing Grubhub of:
- Listing restaurants as available for delivery through Grubhub’s platform without contractual relationships, restaurants’ consent, and disclosing to consumers its lack of relationships with those restaurants.
- Listing higher menu prices on its website and app than what restaurants list for the exact same item, and not disclosing to consumers the difference in price.
- Engaging in bait-and-switch tactics like stacking fees at the end of the ordering process, after initially presenting a single delivery fee to consumers. These supplemental fees are often obscured by combining them in the same line item as taxes.
- Telling consumers they can order online for free, when in fact this only applies to pickup orders.
- Advertising unlimited free delivery for Grubhub+ members even though users still have to pay service fees.
- Generating phone numbers for partner restaurants, such that consumers would believe they were the restaurants’ official phone number, when in reality Grubhub tracked orders places through these generated numbers and charged its partner restaurants a separate commission for those orders, without disclosing this to consumers.
- Creating “microsites” for hundreds of its partner restaurants, which are made to look like the restaurants’ official websites, without disclosing to consumers that the sites are actually run by Grubhub, limiting consumers’ ability to bypass Grubhub and deal directly with local restaurants.
- Deceptively marketing its “Supper for Support” promotion that offered $10 off on orders of $30 or more to help businesses struggling during the pandemic. In reality, restaurants were on the hook for the $10 discount and still had to pay commissions to Grubhub for the full price of the order.
In a statement reported by The Associated Press, Grubhub said, “We will aggressively defend our business in court and look forward to continuing to serve D.C. restaurants and diners.” In another statement published by The Verge, the company said its business practices have always complied with D.C. law and that it "has not misrepresented its fees."
This is not the first time Grubhub has found itself in the crosshairs of a major metropolis. In August 2021, the company was sued by Chicago in a nearly identical lawsuit. The city is seeking injunctive relief in the form of greater transparency, restitution for restaurants and consumers, and civil penalties for violations of the law. That complaint also listed DoorDash.
The Washington, D.C. complaint filed by Attorney General Karl Racine lays out specific examples of Grubhub's alleged deceitful practices and illustrates how they negatively impacted operators.
Using actual menus, the complaint demonstrates how much prices are inflated when using the Grubhub website compared to restaurants. For example, a dinner for a family of four from a local Chinese restaurant ordered through Grubhub costs $143.45 before taxes and fees, while costing only $120.10 on the restaurants’ website before taxes and fees.
“At no point during the ordering process are consumers sufficiently informed that the prices for menu items may be higher than the prices offered elsewhere, as there is no such disclosure on either the restaurant’s menu page or any of the checkout pages,” the suit states.
Additionally, the complaint contends Grubhub halted most of its microsites in 2018, but some are still active as of February.
“This practice by Grubhub of using microsites is simply a way to deceive consumers into ordering from a Grubhub-controlled website, where Grubhub can collect an added commission, instead of from the restaurant’s own official website, which is not subject to a commission,” the complaint states. “This impacts consumers’ ability to make informed decisions about where and how to order from, and support, their local restaurants.”
The third-party delivery company has been the source of lawsuits, as well. Grubhub is seeking action against caps on delivery fees in places like San Francisco and New York.