📉 Allegations of Deceptive Practices
Grubhub was accused of deceptive practices by the FTC and Illinois Attorney General Kwame Raoul. Allegations included misleading delivery costs, inflated driver earnings claims, and listing over 325K restaurants without consent. Customers often faced hidden "service fees" and "small order fees," which raised final costs. These practices led to a $25M settlement. The investigation is part of the FTC’s crackdown on "junk fees." Grubhub also delayed account removals and blocked user access, further aggravating the problem.
💰 Settlement and Financial Impact
Grubhub was initially fined $140M but claimed financial hardship, reducing the penalty to $25M. Most of this amount will be refunded to affected customers. The FTC retained the right to demand the full sum if Grubhub misrepresented its financial condition. The settlement marks a significant financial hit and a reputational blow for the delivery giant.
🛠 Changes to Business Practices
The settlement mandates reforms. Grubhub must now disclose true delivery costs, stop listing unaffiliated restaurants, and simplify cancelations for Grubhub+ subscriptions. It also prohibits inflated driver earnings claims. These changes aim to rebuild trust among consumers and restaurant partners while aligning with FTC's push for transparency in digital marketplaces.
🗨 Grubhub’s Response
Grubhub denies the allegations but states the settlement is "in the best interest" of the company. In its official statement, it emphasized moving forward with improved practices. While the settlement avoids prolonged legal battles, it underscores growing scrutiny of gig economy platforms by regulators and sets a precedent for stricter oversight.
Will this settlement rebuild trust in Grubhub?
