DC Attorney General Karl Racine has filed a lawsuit against food delivery company Grubhub, alleging a number of deceptive marketing practices and hidden fees that have benefited struggling consumers and restaurants during the pandemic.
DC Attorney General Karl Racine has filed a lawsuit against food delivery company Grubhuballeging a number of deceptive marketing practices and hidden fees that have benefited struggling consumers and restaurants during the pandemic.
Among the misleading marketing allegations was a promotion in March and April 2020 titled “Supper for Support,” promoted as a way to help restaurants during the pandemic.
Racine’s office alleges that Grubhub did not fully cover the costs of the discounts as part of the promotion and passed on most of the costs of the discounts to the restaurants. He also charged a commission on the total price of the discounted items, according to the lawsuit.
Other allegations include failure to disclose service charges or pre-order fees, failure to disclose prices were higher on the Grubhub app or website than they were at the restaurant , the list of restaurants that haven’t signed up to be on Grubhub, and the false advertising of free delivery. for consumers who have subscribed to a monthly subscription service.
DC’s lawsuit seeks to force Grubhub to end allegedly illegal practices, compensate affected consumers and pay penalties for violating district law.
“Grubhub charged hidden fees and used bait-and-switch advertising assets, which are illegal,” Racine said in a statement. “On top of that, the company tricked users with a promotion that claimed to support local restaurants in the midst of the pandemic, but in reality, this program reduced profit margins for struggling restaurants while boosting Grubhub’s bottom line. “
Grubhub responded by saying it was disappointed with the lawsuit, but did not specifically address any of the complaints raised in the lawsuit.
“Over the past year, we have sought to engage in constructive dialogue with the DC Attorney General’s Office to help them understand our business and see if there are areas for improvement. We are disappointed that they advanced in this lawsuit because our practices have always been consistent with DC law, and in any event, many of the practices at issue have been discontinued,” Grubhub said in an emailed statement.
Grubhub said it will aggressively defend its business in court.
The DC lawsuit has the support of the local restaurant association.
“While third-party delivery services can be important partners with restaurants, they should not exploit the public or the businesses they serve with misleading claims and unfair business practices. These activities of some of these third-party delivery companies are particularly troubling as restaurants have struggled to simply survive the pandemic and now the recovery,” said Andrew Kline, general counsel for the Restaurant Association of Metropolitan Washington.
Chicago-based Grubhub was acquired in June 2020 by Netherlands-based Just Eat Takeaway for $47.3 billion.
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