Grubhub to pay $25M in deceptive practices settlement with Illinois attorney general and the FTC
SPRINGFIELD, Ill. — Grubhub Inc., an online food ordering and delivery platform, will pay $25 million to settle a dispute over alleged deceptive business practices with the Illinois attorney general and the Federal Trade Commission, officials said Tuesday.
Attorney General Kwame Raoul said he launched an investigation into the 20-year-old operation after receiving “dozens” of consumer complaints and involved the FTC in the nationwide settlement.
“Grubhub defrauded its customers, cheated its drivers, and unfairly damaged the reputations and revenues of restaurants that did not work with Grubhub – all to increase scale and accelerate growth,” said FTC Chairman Lina M. Khan.
Chicago-based Grubhub, which allows consumers to have orders delivered to nearby restaurants through drivers contracted with the company, will pay $24.8 million in restitution, while $200,000 will support the attorney general’s consumer education and enforcement operations general will finance.
Raoul and Khan said the investigation found that Grubhub engaged in illegal practices by misleading customers about delivery fees and the benefits of a Grubhub subscription, misleading drivers about the amount of money they could make and listing restaurants on the app without their knowledge or consent – and in some cases over their objections.
In a statement, Grubhub denied wrongdoing. It said the company is committed to openness in its practices and was cooperating with the FTC in its multi-year review.
“While we categorically deny the FTC’s allegations, many of which are false, misleading or no longer applicable to our business, we believe that settling this matter is in the best interests of Grubhub and allows us to move forward to go,” the statement said. .
In addition to the settlement payment, Grubhub said it will make changes to its platform to make it easier for diners to understand costs and to better explain what delivery drivers can earn.
The settlement also requires Grubhub to immediately delist all unaffiliated restaurants, Raoul said.
The FTC said it does not yet know how many consumers will benefit from the payout. After court approval of the agreement, the agency will develop a recovery plan.