The Federal Trade Commission said Grubhub will pay $25 million to settle complaints by customers and drivers. File Photo by Erik Lesser/EPA-EFE
Dec. 18 (UPI) — The Federal Trade Commission announced Tuesday that the food delivery app Grubhub will pay $25 million to settle charges brought by the agency and the Illinois attorney general over an array of issues, including deceiving its own customers and drivers.
The settlement comes after Grubhub was accused of unlawful practices including deceiving customers about delivery costs and blocking their access to their accounts and funds, deceiving drivers about how much they would make delivering food, and deceptively listing restaurants on its platform without their permission.
“This settlement is the culmination of a multi-year investigation into deceptive and illegal business practices perpetrated by Grubhub,” Illinois Attorney General Kwame Raoul said in a statement.
Raoul said the settlement would provide relief for Illinois customers and send a message to other similar businesses that they will be held accountable for such deceptive acts.
Investigators charged that Grubhub was notorious for adding “service fees” or “small order fees” to deliveries that would more than double the original advertised cost. The FTC said these junk fees would be hidden from customers until late in the ordering process.
The FTC also claimed that Grubhub routinely blocked customer accounts that had large balances of gift card funds, preventing them from having access to that money to pay for food and deliveries. It said in many cases Grubhub did not give customers any meaningful ways to unlock those funds.
“Our investigation found that Grubhub tricked its customers, deceived its drivers and unfairly damaged the reputation and revenues of restaurants that did not partner with Grubhub, all in order to drive scale and accelerate growth,” FTC Chair Lina Khan said in a statement.
Grubhub in its own statement said it “respects” the role the FTC plays in protecting customers and promoting competition and appreciated the ongoing dialogue.
“While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward,” Grubhub said in a statement.
Grubhub said it has also agreed to make changes to its platform to make it easier for customers to understand fees, how it advertises earnings potential for drivers, and how it communicates.
