DC attorney general sues Grubhub over hidden fees, ‘misleading’ marketing
D.C. Attorney General Karl Racine (D) alleged Grubhub exploited local restaurants and violated consumer protection laws through hidden fees and “misleading” marketing tactics during the pandemic, according to a lawsuit filed Monday.
Racine alleged the delivery service app ran promotions that falsely claimed to help struggling restaurants in March and April 2020, failed to disclose that prices were higher in the app than at restaurants, listed restaurants that did not sign up for the platform and misleadingly advertised “free” online ordering, according to the complaint.
“Consumers don’t mind paying for delivery fees, but Grubhub needs to be honest about those fees in the first place,” Racine said in a statement. “With this lawsuit, we are seeking to force Grubhub to end its unlawful practices and be transparent so DC residents can make informed decisions about where to order food and how to support local businesses.”
Grubhub’s marketing promotions made it seem like consumers were helping local restaurants, but in fact the restaurants were required to foot the bill on certain discounts, the complaint alleges.
For example, Grubub’s “Supper for Support” promotion told users who placed orders from 5 p.m. to 9 p.m. each day during the promotion that a participating restaurant would receive $10 off orders of $30 or more. But, “contrary to its advertisements, this promotion did not actually support restaurants—as the restaurants, not Grubhub, were required to foot the full cost of the $10 off promotion,” the complaint states.
The complaint also alleges Grubhub created “microsites” made to look like restaurants’ own official websites without “adequate disclosing” to consumers that the sites are made and run by Grubhub. Consumers who attempt to place orders on the microsites are transferred directly to Grubhub.
A Grubhub spokesperson denied the allegations and said the company has “sought to engage in a constructive dialogue” with Racine’s office to ”help them understand our business and to see if there were any areas for improvement.”
“We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC 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,” the spokesperson said.
It is the latest lawsuit Racine has filed against an online delivery service platform. In November 2020, D.C. settled a lawsuit with DoorDash for $2.5 million over allegations the service misled consumers with its tipping system.
In August 2020, he sued Instacart alleging it charged District residents millions in deceptive fees and avoided local sales tax. Instacart denied the allegations.