D.C. Attorney General Karl A. Racine filed a lawsuit on Monday against food delivery company Grubhub for charging hidden fees and using deceptive marketing tactics during the apex of the coronavirus pandemic to increase profits at the expense of consumers and local small businesses.
Specifically, the lawsuit alleges Grubhub:
- Ran a promotion that falsely claimed to help struggling restaurants during the pandemic.
- Charged hidden and deceptive fees.
- Failed to disclose that prices are higher in the app or website than at restaurants.
- Listed restaurants that did not sign up for the platform.
- Created a fake website that funneled users to Grubhub.
- Listed deceptive “routing” phone numbers.
- Misleadingly advertised “free” online advertising.
- Falsely advertised “free delivery” on subscription services.
Racine said Grubhub abused District residents.
“Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic,” he said. “Grubhub charged hidden fees and used bait-and-switch advertising tactics-which are illegal. On top of that, the company deceived users with a promotion that claimed to support local restaurants at the heart of the pandemic. But in reality, this program cut into struggling restaurants’ profit margins while padding Grubhub’s bottom line.
“Consumers don’t mind paying for delivery fees, but Grubhub needs to be honest about those fees in the first place,” Racine said. “With this lawsuit, we are seeking to force Grubhub to end its unlawful practices and be transparent so D.C. residents can make informed decisions about where to order food and how to support local businesses.”
Andrew Kline of the Veritas Law Firm and general counsel to the Restaurant Association of Metropolitan Washington praised the attorney general’s office for the lawsuit.
“Although third-party delivery services can be important partners of restaurants, they should not exploit either the public nor businesses they serve with misleading statements and unfair trade practices,” Kline said. “The activities of some of these third-party delivery companies are particularly troubling as restaurants have to struggle to simply survive throughout the pandemic and now through recovery.”
Grubhub said it will “aggressively defend its business in court.”
“During the past year, we’ve sought to engage in a constructive dialogue with the D.C. Attorney General’s Office to help them understand our business and to see if there were any areas for improvement,” the company said in an emailed statement to WTOP. “We are disappointed they have moved forward with this lawsuit because our practices have always complied with D.C. law, and in any event, many of the practices at issue have been discontinued.”