Grubhub pays $25 million for allegedly tricking customers and lying to drivers
Grubhub has agreed to pay $25 million to settle a Federal Trade Commission lawsuit that claimed the food delivery service misled customers and drivers while also damaging the reputation of restaurants. The proposed settlement will require Grubhub to make several changes to the platform, such as showing the total delivery cost when customers place an order.
Along with advertising “highly inflated hourly pay rates for drivers,” the FTC’s initial complaint accused Grubhub of hiding “the true cost of its services” by adding delivery fees that raised the price of customers’ final orders. The agency claimed that starting around 2019, Grubhub began advertising lower delivery fees to attract more customers but then began tacking on a “service” fee that increased the cost of orders anyway.
The FTC also alleged the company charged Grubhub Plus members for delivery despite advertising the subscription as having “free” or “$0” deliveries. The agency claimed Grubhub makes the plan easy to sign up for but difficult to cancel while also allegedly blocking the accounts of users with large gift card balances.
Additionally, the FTC accused Grubhub of adding restaurants to the platform even if they never signed up to sell food on the service. “Grubhub has had as many as 325,000 unaffiliated restaurants on its platform — more than half of all of the available restaurants on Grubhub,” the FTC claims. As a result, many customers wound up having issues with their orders, resulting in bad feedback for unaffiliated restaurants.
Grubhub is now required to show customers the full cost of delivery and can no longer add “junk fees” to orders. It’s also banned from listing unaffiliated restaurants on the platform, and can only make driver earnings claims “that it can back up with evidence and in writing.” Grubhub must also notify customers when they’re banned and offer a way to appeal the decision, as well as make it easier to cancel Grubhub Plus.
“While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward,” Grubhub spokesperson Najy Kamal said in a statement to The Verge. The company also responded to the settlement in a post on its website.
Though Grubhub was initially ordered to pay $140 million, it is “partially suspended based on the company’s inability to pay the full amount.” The company’s $25 million will go toward refunding affected customers, but the FTC says the full judgment will be due “immediately” if Grubhub “is found to have misrepresented its financial status.”
Grubhub has agreed to pay $25 million to settle a Federal Trade Commission lawsuit that claimed the food delivery service misled customers and drivers while also damaging the reputation of restaurants. The proposed settlement will require Grubhub to make several changes to the platform, such as showing the total delivery…
Recent Posts
- How to watch Spain vs England: Free Streams & TV Channels for Women’s World Cup 2027 qualifier
- New York lawmakers pass one-year ban on new data centers
- The University of Cambridge says it successfully tested a vaccine with an AI-designed antigen
- MAHA wants to make cotton the new beef tallow
- What do you mean my new smart scale is ‘built for GLP-1 users’?
Archives
- June 2026
- May 2026
- April 2026
- March 2026
- February 2026
- January 2026
- December 2025
- November 2025
- October 2025
- September 2025
- August 2025
- July 2025
- June 2025
- May 2025
- April 2025
- March 2025
- February 2025
- January 2025
- December 2024
- November 2024
- October 2024
- September 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023