Grubhub agreed to pay a $25 million settlement on accusations that it tricked users, delivery drivers and restaurants in an effort to quickly grow its business. The Federal Trade Commission (FTC) and the attorney general for the state of Illinois said the food delivery company engaged in unlawful practices designed to deceive customers and workers.
The agencies claim Grubhub hid the real costs on its app leading to a final price that was often double than what was originally advertised due to added service and small order fees.
Grubhub is also accused of inflating hourly pay rates in ads that were well above what drivers would realistically earn. The ads claimed applicants could make up to $40 an hour, when only 2% of its drivers actually did.
According to the complaint, Grubhub regularly listed restaurants on its platform without their knowledge as a self-described “mechanism to gain national scale.” Then when things went wrong, customers blamed the restaurants.
Grubhub also allegedly delayed taking those places off its platform after being asked.
The company commented on the settlement.
“While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward,” Grubhub said.
In addition to the $25 million payment, Grubhub must also stop adding junk fees and disclose the true cost of deliveries up front.
