Grubhub should pay DC $3.5 million over claims it charged prospects hidden charges

Grubhub has been ordered to pay $3.5 million to settle a lawsuit from the District of Columbia that claims the corporate misled prospects by tacking on hidden charges to their orders. According to a press release, Grubhub should pay $800,000 to DC as a civil penalty, whereas the remaining $2.7 million “will be paid back to affected customers.”

In March, DC Attorney General Karl Racine filed a lawsuit in opposition to Grubhub, accusing it of falsely promising “free” on-line orders to prospects, in addition to “unlimited free delivery” for individuals who subscribe to Grubhub Plus. The lawsuit alleges this observe is “deceptive” since Grubhub nonetheless takes a service charge for non-pickup orders made by Grubhub Plus prospects, and fees each supply and repair charges for traditional orders as effectively.

It additionally cites a number of different questionable enterprise practices, resembling the best way Grubhub bundled service charges in a single line with gross sales taxes on the checkout web page, one thing the corporate solely stopped doing not too long ago. Grubhub was beforehand accused of itemizing eating places on the platform with out their permission to increase the service, and launched a sequence of microsites resembling eating places’ actual websites in an effort to route orders by way of Grubhub. At the time of the swimsuit’s submitting, Grubhub refuted the claims and mentioned “many of the practices at issue have been discontinued.”

As a part of the settlement, Grubhub’s required to “place a refundable credit” within the accounts of affected prospects, which applies to anybody who has “paid a small order or service fee on an order placed via the Grubhub Platform” at a restaurant positioned in DC anytime between January 1st, 2016 to December thirty first, 2022. Affected prospects will get break up into three teams relying on how typically they used the platform, with these within the first group getting a minimum of $4.50, the following getting a minimum of $7, and the folks within the remaining group getting a minimum of $10. If the account proprietor doesn’t redeem the credit score inside 90 days of receipt, Grubhub’s required to ship them a test with the quantity they’re owed.

In addition to the cost, the platform’s required to make a lot of modifications, resembling prominently displaying any extra charges to prospects at checkout, itemizing every charge on separate strains, and shutting down or transferring possession of the microsites it made for eating places positioned in DC. Grubhub should additionally cease telling Grubhub Plus members that they will obtain “free delivery,” and now has to reveal when the costs for sure menu gadgets are increased than what they’re marketed at eating places themselves. In an up to date post on its website, Grubhub says it has agreed to “provide additional clarity for our diners and thousands of restaurant partners.”

“Grubhub used every trick in the book to manipulate customers into paying far more than they owed, and even worse, they did so at the height of a global pandemic when District residents were already struggling to make ends meet,” Racine says in an announcement. “Grubhub’s hidden fees and misleading marketing tactics were designed to get the company an extra buck at the expense of DC residents but we’re not letting them get away with it.”