Grubhub Sued by Washington, D.C. for Inflated Pricing — What It Could Mean for Consumers

Grubhub
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Washington, D.C. is the most recent addition in a growing list of cities, municipalities and food service establishments suing food delivery app Grubhub for “deceptive business practices.”

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In a 56-page document filed with the Superior Court of the District of Columbia, Grubhub Holdings, Inc. was sued for seven violations of the District’s Consumer Protection Procedures Act. Take a look.

Misrepresenting Non-Partner Restaurants

First, Grubhub allegedly added non-partner restaurants to its website without the restaurants’ consent and without disclosing the restaurants’ status as non-partners to consumers. Menu offerings, prices and hours for these non-partner sites were frequently out of date or incorrect, the suit alleges. The company was also sued for this practice by restaurant company CO Craft in May 2020.

Fees Obscured

Grubhub allegedly obscured its service fee and small order fee into a “taxes” line item, only disclosing a delivery fee. By the time consumers realize there are added fees, they have already invested time in choosing their order.

False Advertising

Grubhub offered a subscription service, Grubhub+, that advertised “unlimited free delivery,” but consumers still had to pay a “service fee” for delivery orders, the lawsuit claims. Allegedly, only pick-up orders are free. GrubHub told The Verge, a tech news site, that it discloses its fees in its terms of use but moving forward, will list fees and prices more prominently.

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Misrepresenting Partner Restaurant Phone Numbers

Grubhub allegedly assigned some partner restaurants “routing telephone numbers” that looked like the restaurants’ direct lines but were actually Grubhub numbers. Grubhub charged partner restaurants a commission for orders that came through these numbers, without clearly disclosing the fact to customers, according to the lawsuit.

Misrepresenting Partner Restaurant Websites

Grubhub allegedly created microsites designed to look like partner restaurant websites, without disclosing this to consumers. This limited the consumers’ ability to choose an ordering and delivery method.

The City of Chicago sued Grubhub for the same “deceptive and unfair tactics” in 2021, according to an article on The Verge. Grubhub claims it has since retired its microsites.

Higher Menu Prices

Grubhub often published prices higher than their partner restaurants’ actual prices on their website, without clearly and sufficiently disclosing to their customers that the prices for items ordered through the Grubhub app may be higher, according to the court document. Because Grubhub also charges delivery fees, service fees and a “small order” fee when applicable, consumers reasonably assume that menu prices are the same as the restaurant charges.

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In a statement, Grubhub told The Verge that it will prominently tell consumers that prices may be lower ordering directly from the restaurant.

Misrepresenting the ‘Supper for Support’ Promotion

The City of Chicago suit also called out Grubhub for its “Supper for Support” promotion, which is also listed as one of the items in the District of Columbia case. Through this program, restaurants were allegedly required to foot the bill for a $10 discount off a $30 or more purchase.

How Will This Affect Customers?

While Grubhub director of corporate communications Katie Norris said in a statement that “many of the practices at issue have been discontinued,” the lawsuit could spark Grubhub to be more careful about disclosing fees and relationships. This would make it easier for consumers to make informed decisions when placing orders through the app.

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Grubhub is not the only restaurant delivery app with high delivery fees and deceptive practices, according to The Verge. DoorDash has also come under fire for misleading customers.

Ideally, the D.C. lawsuit against Grubhub will force delivery services to be more forthcoming in their business practices, relationships and fees, which means people can order with peace-of-mind knowing they aren’t paying more than they should.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.
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