Washington Attorney General Carl Racine announced Today, his office filed a lawsuit against Grubhub for “deceiving the residents of the district and abusing local restaurants in order to increase their own profits.”
The lawsuit alleges that Grubhub violated the District of Columbia Consumer Protection Procedures Act (CPPA) in eight different ways, mostly aimed at false advertising. The report mentions misleading prices (often higher in apps than restaurants) and false claims that Grubhub+ delivery was free if they included a service charge.
Some complaints point to practices that led to the closure of the platform, such as the early era of the Grubhub pandemic.support dinnerPublicity. Grubhub, launched in late March 2020, allowed restaurants to offer a $10 coupon for orders over $30, but the restaurant had to pay the bill for that free meal. ConsumerGrubhub encourages customers to “save by supporting the restaurant.” [they] Love,” although their ads actually put more pressure on the restaurant to cut profit margins (if one nearby taco shop is in the promotion and the other is not, what do you think consumers will do with their business). Where to buy? To send?).
“The company has misled users with promotions that allegedly support local restaurants during the pandemic. But in fact, the program has reduced the profit margins of struggling restaurants while replenishing Grubhub’s bottom line,” Attorney General Racine said in a statement.
Grubhub is also being sued for listing restaurants on its website and for not registering with Grubhub, creating websites for affiliated restaurants without their consent, and listing phone numbers on restaurant pages that point to Grubhub representatives instead of grubhub. Grubhub has since also stopped this practice, likely as a result of a previous lawsuit over Grubhub listing restaurants without their consent.
In an emailed statement, a spokesperson for the company said: “We are disappointed [the Attorney General’s office] We brought this lawsuit because our practice has always been in compliance with DC law, and in any case, many of the practices in question were closed. We will actively defend our business in court and look forward to continuing to serve restaurants and eateries in the District of Columbia. A spokesperson said Grubhub has been working with Racine’s office for the past year to resolve their issues.
As a result of the lawsuit, a Grubhub spokesperson told gaming-updates that the app will be making some messaging changes to its app that will apply to all users, not just DC clients. Grubhub will now mention at checkout that in-store prices may be lower. Instead of promoting Grubhub+ by offering unlimited free shipping, the company will be more transparent about its actual offer, which offers $0 shipping on orders over $12, though service charges may apply. Grubhub will also clarify that customers can order online for free, but this only applies when you come in for food.
Despite booming delivery orders during the pandemic, food delivery apps are still struggling to turn a profit, even as their business model leaves many gig workers and local restaurant owners in the lurch.
These inconsistencies draw the attention of state and federal regulators. Attorney General Racine’s office has a history of suing delivery apps for fraudulent activities. In 2019, Racine sued DoorDash for using customer tips to pay basic wages to delivery drivers by tipping drivers in full. A year later, DoorDash was fined $2.5 million, including $1.5 million paid to D.C. employees.