Illinois Attorney General Kwame Raoul and the FTC have reached a $25 million settlement with Grubhub over what officials called “alleged deceptive business practices.”
Those practices negatively impacted customers, drivers and restaurants, and caused “significant harm” to all three groups, according to a press release from Raoul’s office.
“This settlement is the culmination of a multi-year investigation into deceptive and illegal business practices perpetrated by Grubhub,” Raoul said in a statement. “I thank FTC Chair Lina Khan for another successful partnership between our offices that has resulted in relief for Illinois consumers, and I remain committed to holding businesses like Grubhub accountable for their deceptive business practices.”
Approximately $24.8 million will go to consumers via refunds, according to the release, with the rest of the funds going to the Attorney General’s office.
According to the complain filed by Raoul and FTC, Grubhub engaged in practices that impacted a wide variety of groups. Customers were affected by what officials described as “surprise fees,” which contradicted advertisements the company published promising “single, low-cost” fees for its services.
The officials allege that Grubhub engaged in the practice to help drive sign-ups for its Grubhub Plus service.
Drivers were impacted by the company misleading them on the amount of money that they could expect to make in their roles, according to the settlement.
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Finally, as many as 325,000 restaurants were added to the service either involuntarily or against their explicit wishes, according to the settlement. The practice allegedly diverted diners from ordering directly from restaurants, and also caused issues as drivers were forced to pay for meals using Grubhub credit cards that were sometimes declined.
This often led to restaurants being unpaid for food they’d prepared, or diners blaming restaurants for delayed or canceled deliveries.
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Grubhub will be required to remove unaffiliated restaurants from its services, and will also be required to make more explicit disclosures of all fees associated with its deliveries. It will also be required to provide proof of earnings claims to drivers upon request, according to the settlement.
It is unclear how refunds and payouts will be processed in response to the settlement.
