District of Columbia Attorney General Karl Racine filed an action against Grubhub Holdings Inc. and Grubhub Inc. on Monday arguing that the delivery service harms District residents and exploits restaurants through the use of deceptive tactics as it has throughout the pandemic. The lawsuit seeks to end Grubhub’s questionable marketing practices, require it to be forthcoming about prices and fees, compensate impacted customers, and pay civil penalties.
The District of Columbia Superior Court complaint accuses Grubhub of using numerous strategies to “increase profits at the expense of consumers and local small businesses,” the accompanying press release explains. In particular, the suit cites eight separate practices that the attorney general claims violate the District’s Consumer Protection Procedures Act.
First, the complaint argues that Grubhub falsely advertises relationships with eateries it has no affiliation with. According to the filing, this impacts customers by increasing the likelihood that menu offerings, prices, and hours for non-partner restaurants will be out-of-date or incorrect, and that orders from those restaurants will take longer to fulfill, will be incorrect, or will be canceled altogether.
The complaint also blames Grubhub for listing higher menu prices on its own site than elsewhere, including on the restaurant’s own website, without adequately disclosing that fact to consumers.
Among other grievances, Racine accuses Grubhub of engaging in a bait-and-switch scheme by failing to disclose its “service fee” and sometimes applicable “small order fee” upfront. Instead, only when customers reach the checkout page, after investing time searching for a restaurant and choosing a meal, do they become aware of additional charges, despite Grubhub’s representation that customers only pay a “delivery fee.”
According to Racine’s press release, area restaurants applaud the suit. The General Counsel of the Restaurant Association of Metropolitan Washington commented that “[a]lthough third party delivery services can be important partners of restaurants, they should not exploit either the public nor the businesses they serve with misleading statements and unfair trade practices. The activities of some of these third party delivery companies are particularly troubling as restaurants have struggled to simply survive throughout the pandemic and now through recovery.”
As Law Street Media previously reported, this is not the first enforcement action Racine has taken against online food ordering and delivery platforms. Two years ago, he sued Doordash, accusing the company of funneling customer tips intended for delivery workers to the company itself.
