D.C. Attorney General Karl Racine has filed a lawsuit against food delivery company Grubhub, alleging a number of deceptive marketing practices and hidden fees that took advantage of consumers and struggling restaurants during the pandemic.
Among allegations of misleading marketing was a promotion in March and April of 2020 called “Supper for Support,” promoted as a way to help restaurants during the pandemic.
Racine’s office alleges Grubhub did not fully cover the costs of discounts under the promotion, and passed most of the costs of discounts on to restaurants. It also charged full-price commission on discounted items, the suit alleges.
Other allegations include not disclosing service fees or small order fees up front, failing to disclose prices were higher on the Grubhub app or website than they were at the restaurant, listing restaurants that did not sign up to be on Grubhub, and falsely advertising free delivery for consumers who signed up for a monthly subscription service.
The D.C lawsuit seeks to force Grubhub to end allegedly unlawful practices, provide restitution to affected consumers and pay penalties for violating District law.
“Grubhub charged hidden fees and used bait-and-switch advertising actives, which are illegal,” Racine said in a statement. “On top of that, the company deceived users with a promotion that claimed to support local restaurants during the heart of the pandemic, but in reality, this program cut into struggling restaurants’ profit margins while padding Grubhub’s bottom line.”
Grubhub responded by saying its was disappointed with the lawsuit, but did not specifically address any of the complaints raised in the suit.
“During the past year, we’ve sought to engage in a constructive dialogue with the D.C. 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 D.C. law, and in any event, many of the practices at issue have been discontinued,” Grubhub said in an emailed statement.
Grubhub said it will aggressively defend its business in court.
The D.C. lawsuit has the support of the local restaurant association.
“Although third party delivery services can be important partners of restaurants, they should not exploit either the public nor the businesses they serve with misleading statements and unfair trade practices. These activities of some of these third party delivery companies are particularly troubling as restaurants have struggled to simply survive through the pandemic and now through recovery,” said Andrew Kline, general counsel to the Restaurant Association of Metropolitan Washington.
Chicago-based Grubhub was acquired in June 2020 by Netherlands-based Just Eat Takeaway for $47.3 billion.