Washington, D.C. Attorney General Karl Racine recently sued food delivery service app Grubhub over what he says are deceptive practices that impact both consumers and local businesses.
The lawsuit contends that Grubhub participates in multiple practices that are misleading.
On the consumer end, it claims that Grubhub does not list whether a restaurant is partnered with the company. Partner restaurants pay a marketing commission to Grubhub while non-partner restaurants do not. Racine claims that because partner restaurants were joining slowly, the firm added more non-partners to recoup fees, which led to dilution of the website. Grubhub allegedly more than doubled its restaurant inventory without informing either consumers or restaurants.
The lawsuit also claims that Grubhub spikes prices for food compared to what the restaurants charge on their menu, falsely claims that the delivery fee is the only cost to consumers, and uses deceptive phone numbers and websites that are meant to look like the official restaurants’ contact information. This is done in order to contact the restaurant that the consumer orders from and claim commission whenever someone calls or is redirected from the manufactured website and cell phone number.
The complaint also claims that Grubhub offered delivery from over 1,000 D.C. restaurants without their consent, resulting in outdated and inaccurate menus.
Racine adds that during the height of the pandemic, Grubhub launched a promotion titled, “Supper for Support,” in the District of Columbia where consumers could save money while also supporting local independent restaurants hit by the Covid-19 pandemic. But the firm allegedly failed to mention that restaurants that agreed to participate in the promotion were required to fund its full cost ($10 off for each other). Additionally, the attorney general says in the lawsuit, the establishments were required to pay Grubhub marketing and delivery commissions based on higher non-discounted products rather than on the lower amount the customer paid.
The complaint includes a chart to demonstrate this potential disparity.
“In one of Grubhub’s most shameless moves, at the beginning of the pandemic, it ran a discount called ‘Supper for Support,’ ginning up business by claiming to help struggling restaurants, and then stuck restaurants with the bill,” Racine tweeted.
Grubhub maintains it has done nothing wrong.
“Our practices have always complied with D.C. law, and in any event, many of the practices at issue have been discontinued. We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners,” a Grubhub spokesperson in a press release said.
This is not the first time that Racine has sued delivery companies. In 2020, he sued Doordash and Instacart over their tipping practices; this has so far resulted in Doordash agreeing to pay a $2.5 million settlement.
Other cities have been seeking to add regulations on delivery services since the start of the pandemic. Chicago filed a lawsuit similar to Racine’s. It claims the firm is using bait-and-switch tactics with fees. California added regulations that prohibit food delivery services from arranging for the delivery of food delivery orders without the expressed authorization of the food facilities. New York City has already added a 15% delivery fee cap last year, which has led to delivery companies suing the city over the cap.