Grubhub charged customers hidden fees, used misleading marketing tactics and “exploited local restaurants” struggling during the onset of the COVID-19 pandemic, according to a lawsuit filed by Washington DC Attorney General Karl A. Racine.
The lawsuit filed Monday, March 21, accuses the third-party delivery company of eight different violations of DC’s Consumer Protection Procedures Act, including running fake campaigns claiming to support local restaurants, hiding the true cost of delivery orders from consumers and using “bait” and switch advertising tactics . ”
“With this lawsuit, we are seeking to force Grubhub to stop its illegal practices and be transparent so that DC residents can make informed decisions about where to order food and how to support local businesses,” Racine said in a statement.
A spokesman for Grubhub said in a statement to McClatchy News that the company has not violated DC law, adding that many of the practices listed in the lawsuit have been discontinued.
In its lawsuit, Racine accuses the company, which operates food delivery services in more than 4,000 U.S. cities, of running a campaign in March and April 2020 that erroneously claimed to help restaurants struggling due to restrictions on indoor dining at the time.
The “Supper for Support” campaign offered users a $ 10 discount on every order of $ 30 or more. However, according to the lawsuit, Grubhub did not fully cover the cost of the discounts and left a large part of the burden on the restaurants.
The company is also accused of forcing restaurants to pay full commission on discounted orders.
“This campaign seriously cut into the already small profit margins of restaurants and misleading residents of DC who believed that their orders through Grubhub would help their favorite restaurants,” the lawsuit states.
But Grubhub says all terms of the campaign – which are no longer running – were clearly disclosed to restaurants that chose to participate.
“In addition, dinner supper campaigns for Supper for Support in no way stated that participating restaurants were not financially obligated to the discounts,” the statement said. “In promotions going forward, Grubhub will inform diners when a diner campaign is funded by the restaurant.”
The lawsuit also accuses Grubhub of hiding the true cost of consumer delivery orders and adding service and small order fees during the final step of the checkout process.
“This practice constitutes a ‘dark pattern’ – a design function that deceives, forces or manipulates consumers to make choices that are either not what they intended or not in their best interests,” the lawsuit states.
“In the future, Grubhub will individually list each applicable fee on the payment page and provide diners with a description of the fee,” the company spokesman said in a statement.
The spokesman said the company has been in discussions with the DC Attorney General’s office over the past year to see how it can improve its practice.
“We are disappointed that they have proceeded with this lawsuit because our practice has always been in accordance with DC law, and in any case, many of the practices in question have been discontinued,” the statement said. “We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and eateries.”