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Grubhub ordered to pay $3.5 million in Washington DC deceptive practices suit
Do you ever order food online and realize what you thought would be a $12 chicken sandwich is actually more like a $50 chicken sandwich?
That’s exactly what happened to a bunch of D.C.-area Grubhub customers. The food delivery company has been ordered to pay a whopping $3.5 million after it was found violating the District of Columbia’s Consumer Protection and Procedures Act.
“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,” D.C. Attorney General Karl Racine said in a statement when he first sued Grubhub in March. “Grubhub charged hidden fees and used bait-and-switch advertising tactics — which are illegal. On top of that, the company deceived users with a promotion that claimed to support local restaurants during the heart of the pandemic. But in reality, this program cut into struggling restaurants’ profit margins while padding Grubhub’s bottom line.”
The District of Columbia is suing Grubhub for hidden fees, misleading advertising, and more
The AG’s complaint alleged that Grubhub imposed hidden fees on users and listed items at higher costs than the restaurants’ very own menus did, the DCist reported.
Customers in the area will collectively receive $2.7 million of the settlement directly, which Racine told ABC News will be given in “a refundable credit and if the credit is not used within 90 days the money will be sent to customers in the form of a check.” The company will also have to detail each fee associated with its service at checkout.
Grubhub did not immediately respond to Mashable’s request for comment, but in a statement to ABC News said that settling was in “the best interest of our business” and that the issue is now “resolved.” The company added that it is “committed to supporting all restaurants and diners, and is taking a number of steps to ensure price transparency.”
Grubhub ordered to pay $3.5 million to settle Washington DC deceptive practices lawsuit
Grubhub has been ordered to pay $3.5 million to settle the lawsuit filed against the company by the District of Columbia over “deceptive trade practices.” Washington DC Attorney General Karl Racine has announced that his office has reached an agreement with the food delivery service “for charging customers hidden fees and using deceptive marketing techniques.” If you’ll recall, his office sued the company earlier this year, accusing it of charging hidden fees and misrepresenting Grubhub+ subscription’s offer of “unlimited free delivery,” since customers still have to pay a service fee.
The DC Attorney General’s office also accused the company of listing 1,000 restaurants in the area without their permission by using numbers that route to Grubhub workers or creating websites without the eateries’ consent. A previous TechCrunch report said the company had already ended those practices. Racine also said at the time that Grubhub ran a promotion called “Supper for Support” at the beginning of the pandemic and then “stuck restaurants with the bill” that cut into their profit margins.
Grubhub called the lawsuit frivolous at the time of its filing and said that the company was “disappointed [the AG’s office has] moved forward with [it] because [the service’s] practices have always complied with DC law, and in any event, many of the practices at issue have been discontinued.”
Under the terms of the settlement, Grubhub will pay affected customers in the DC area a total of $2.7 million. Their cut will be credited to their accounts, and it will be sent to them as a check if it remains unused within 90 days. In addition, the company has to pay $800,000 in civil penalties to the District of Columbia and has to clearly mark additional fees people have to pay with their order going forward.
My office reached a $3.5 million settlement with Grubhub for charging customers hidden fees and using deceptive marketing techniques.
As a result, $2.7 million will be returned to the consumers who were impacted, and it will have to shape up and disclose every fee separately.
— AG Karl A. Racine (@AGKarlRacine) December 30, 2022
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