Food delivery app Grubhub has settled a $25 million lawsuit with the Federal Trade Commission over allegedly deceptive business practices that misrepresented driver wages and delivery prices.
According to the suit, settled Tuesday, Grubhub would hide the “true price” of a food delivery order until the last moment, when scores of hidden fees would be added to the total.
Additionally, the FTC accused Grubhub of publishing misleading advertisements featuring inaccurate hourly pay rates well above drivers’ expectations.
The FTC also said Grubhub allegedly added thousands of restaurants to its platform without their express permission, causing confusion and harm to both the restaurants and customers.
“Our investigation found that Grubhub tricked its customers, deceived its drivers, and unfairly damaged the reputation and revenues of restaurants that did not partner with Grubhub — all in order to drive scale and accelerate growth,” FTC Chair Lina Khan said.
As part of the settlement, Grubhub must pay a $25 million fine and agree to cease these practices.
While Grubhub agreed that the settlement was the best path forward for the business, it denied all of the FTC’s allegations, calling them misleading and inaccurate.
The settlement came on the same day the FTC announced new rules regarding “junk fees.” Businesses now must advertise only the accurate and full price of a service or product.
• Vaughn Cockayne can be reached at vcockayne@washingtontimes.com.
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