The District of Columbia sued Grubhub over the company’s alleged misleading business practices. As a result, Grubhub was compelled to pay a $3.5 million settlement.
Attorney General Karl Racine of Washington, D.C., stated on Friday that Grubhub had been found guilty of violating the city’s consumer protection rules. It violated the rules by “charging clients hidden fees and utilizing deceptive marketing practices to maximize profits.”
In March, the District of Columbia filed a lawsuit against Grubhub. It was alleged to allegedly violate its Consumer Protection and Procedures Act.
Consumers in the Washington, D.C., region will receive a total of $2.7 million. While talking about compensation, Racine stated, “will be paid back to affected customers.”
“Those with active Grubhub accounts will receive a refundable credit, and if the credit is not used within 90 days, the money will be sent to customers in the form of a check,” he said. The food delivery service platform will also be required to pay the District of Columbia $800,000 in civil penalties.
“Grubhub used every trick in the book to manipulate customers into paying far more than they owed. Even worse, they did so at the height of a global pandemic when District residents were already struggling to make ends meet.” Racine said in a statement.
Grubhub assisted all restaurants and diners
He added, “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. No company, big or small, can take advantage of DC residents without consequence.” GrubHub will have to be more explicit about any extra charges that apply to your order.
The corporation released a statement. The statement claimed, “Settling this lawsuit is in the best interest of our business, and the matter is now ended.” “Grubhub is dedicated to assisting all eateries and customers and is making a variety of efforts to ensure price transparency.”
According to Liza Dee, a spokesperson for Grubhub, resolving the lawsuit was in the company’s best interests. In an email, Dee stated that Grubhub was committed to assisting all restaurants and diners.” Moreover, it was “taking a number of efforts to guarantee price transparency.”
In accordance with the ruling, Grubhub must stop charging menu prices higher than those offered at restaurants unless it makes it abundantly clear that the prices are higher. Other requirements include disclosing when it presents search results that additional fees may apply at checkout and listing the fees as separate line items.
People with active Grubhub accounts are entitled to refundable credits. Moreover under the terms of the consent decree, the firm is required to mail checks for the amounts due if the credits are not utilized within 90 days. In addition, three categories will be created based on the account holders’ ordering history, including frequency of order.