A major settlement has been reached between food delivery service Grubhub and federal and state regulators over allegations of deceptive business practices. The company will pay $25 million to resolve claims brought by the Federal Trade Commission and Illinois Attorney General’s office.
Regulators initially sought $140 million in penalties but reduced the amount based on Grubhub’s reported financial capacity. However, the full penalty could be reinstated if the company is found to have misrepresented its financial situation.
The investigation uncovered several controversial practices, including the company’s alleged listing of restaurants on its platform without their permission, which led to delivery complications and frustrated customers. The regulators also found that Grubhub allegedly concealed fees until checkout and provided misleading information to Grubhub+ subscribers about fee avoidance.
Additionally, the company faced scrutiny over its driver compensation claims. According to the agencies, while Grubhub advertised potential earnings of up to $26 per hour, only about 2% of drivers actually achieved such earnings.
Grubhub has pushed back against these allegations. A company representative stated that while they deny the claims, which they describe as inaccurate, misleading, or outdated, they chose to settle to move forward with their business operations.
The settlement mandates that Grubhub discontinue these practices, which regulators claim violated both federal and state regulations. According to the agencies, these actions by Grubhub were designed to rapidly expand their restaurant offerings but ultimately harmed both restaurants and customers.
