WASHINGTON, D.C.—The attorney general for the District of Columbia has filed a lawsuit against Grubhub, claiming the online delivery company lists restaurants without their permission and misleads customers with its prices, among other alleged illegal actions.
“Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic,” said D.C. Attorney General Karl Racine in a statement. “Grubhub charged hidden fees and used bait-and-switch advertising tactics—which are illegal.”
The Verge reports that the lawsuit argues that Grubhub claims to offer free online orders and free delivery for Grubhub Plus users, but the delivery app’s orders are only free if customers pick up the order, and Plus users are charged service fees.
The complaint also says that Grubhub charges higher restaurant prices on its app than customers would pay if they ordered directly through the business, and Grubhub is not transparent about this.
“Because Grubhub already charges consumers several different types of fees for its services ... consumers expect that the menu prices listed on Grubhub are the same prices offered at the restaurant or on the restaurant’s website,” the statement said.
Grubhub allegedly has listed restaurants on the app without their consent and routes orders through its app, taking a commission, and the lawsuit argues that “over a thousand” D.C. restaurants were listed on the app. The restaurants never agreed to be on Grubhub, the lawsuit maintains, and the unapproved listings often had menu errors which resulted in incorrect order fulfillment, late or cold orders, or orders that had to be canceled altogether, with the blame resting on the restaurants.
The online delivery company also has created restaurant microsites that look like official restaurant sites, as well as custom phone numbers that let it charge fees when customers call restaurants, even when the calls didn’t result in orders. The company also offered a “Supper for Support” promotion that required restaurants to foot the bill for a special discount.
In a statement to the Verge, Grubhub says it no longer lists restaurants that haven’t agreed to work with it. It also has retired its microsites and the Supper for Support program.
“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,” said Katie Norris, director of corporate communications, in the statement. “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. We will aggressively defend our business in court and look forward to continuing to serve D.C. restaurants and diners.”
According to NACS’ “Last Mile Fulfillment in Convenience Retail” report, 61% of retailers are satisfied with their third-party delivery partners. Concerns include high fees, little access to consumer data, difficulties delivering age-restricted products and service and operational issues. Read more about these challenges and what c-stores are doing to make delivery work for their businesses in “Delivering Convenience” in the December 2021 issue of NACS Magazine.