DC is suing Grubhub, a third-party grocery delivery service, for allegedly misleading residents about hidden fees and claiming to help local restaurants while those same restaurants pay for advertised discounts, among other things.
The violations of the county’s Consumer Protection Act are in the Lawsuit filed by DC Attorney General Karl Racine including restaurants on its platform with which it had no relationship; Display higher prices for menu items than local restaurants listed on their own menus; and various methods of keeping customers on Grubhub rather than allowing them to contact the restaurant directly and avoid the platform’s commissions.
“While DC consumers, and frankly other consumers, are happy to pay for the convenience of grocery delivery — I know I have that — what they want to pay for are fees that are prepaid,” Racine tells DCist/WAMU . “Unfortunately, what we have seen upon careful and meticulous investigation over a period of months is that Grubhub has a practice, and I would even say a pattern, of charging hidden fees [and] otherwise, deception and misleading of consumers.”
In a case that Racine called “one of Grubhub’s most shameless moves,” the company allegedly created an event that appeared to save consumers money while supporting local restaurants that have been hit hard by the then-new pandemic, though Grubhub ” money took over everything, and the rebate that the consumer got came from the restaurant itself. It’s not cool and it’s not legal,” he says.
A Grubhub spokesman called the lawsuit “frivolous.” a tweet. The company said in a statement that it has been in dialogue with the DC AG office for a year and is “disappointed that they have proceeded with this lawsuit because our practices have always complied with the laws of DC, and certainly many.” of the practices in question have been discontinued.”
Racine confirms that his office held discussions with Grubhub prior to filing the lawsuit. “Even the federal prosecutor would have liked to have solved this case without a lawsuit,” he says. “We don’t file lawsuits just to burn paper. We file lawsuits to actually give money back to the exploited consumers. As soon as Grubhub wants to return money to consumers, we will settle the case.”
The lawsuit asks Grubhub to be transparent about its costs and fees, end its allegedly fraudulent marketing practices, pay customers compensation, and pay DC fines for violating its laws.
While Grubhub is a grocery delivery service that operates in thousands of locations across the country, it doesn’t manufacture groceries, nor does it own the cars that bring meals to consumers. Instead, it lists local restaurants on its platform and then bets on them so-called “gig economy” Workers delivering the food who do not receive a traditional salary or benefits. The company makes money from the commission fees it charges restaurants for each order, as well as from marketing and other services. (It works that way too other third-party delivery appslike DoorDash and UberEats, work.) About two decades after its inception, Grubhub was acquired by European company Just Eat Takeaway for more than 7 billion dollars in 2021.
This isn’t the first time Racine’s office has sued third-party delivery apps. 2019, The Attorney General sued DoorDash for violating the county’s Consumer Protection Act and alleging that the company pocketed tips for delivery drivers. A year later, the DC AG has reached an agreement with DoorDash – The company paid $2.5 million and admitted no wrongdoing. In 2020 the Office sues Instacart over allegations of fraudulent fees and evasion of sales taxes. This lawsuit is not yet closed.
At the onset of the pandemic, the DC Council also took several steps to further regulate the practices of third-party apps in DC in May 2020 The Council passed a temporary cap 15% on the amount of commissions apps might charge restaurants (Fees can often reach 30%). Months later, Racine sent DoorDash a cease and desist letter Letter after learning that the company’s premium program required restaurants to be charged more than 15% for participation,
Another preliminary DC Council bill prevented in February 2021 Prevent apps from offering a restaurant’s food without the express permission of the institution.
One of the allegations in Racine’s lawsuit against Grubhub is that the company has listed restaurants on its platform, although there is no partnership.
“The issues with restaurants being listed without permission is a problem that has plagued our industry since the launch of these apps,” said Tom Healy, managing partner of Baan Siam Washington City Papers in February 2021. He said that Grubhub added the Mount Vernon restaurant to its listing without permission by using the company’s logo and menu, and the platform’s listing topped the restaurant’s own website in search results. “They are starting to absorb our market presence. Once they’ve absorbed everyone, they’ll have you under their thumb. If you don’t want to partner, they threaten to kick you off a platform that “everyone is used to using”.
Grubhub announced to shareholders in 2020 that it added 150,000 unaffiliated restaurants to the platform nationwide, although the company now says it has stopped the practice.
Many restaurants have third-party delivery apps as “necessary evil.“Alternatives are hard to come by.
The team behind Shaw bar Ivy & Coney has launched its own takeaway and delivery platformDC To-GoGo, May 2020, when delivery and pickup outperformed serving customers inside.
“When delivery and collection became our main model, our first week of dealing with Grubhub, it was immediately clear that we weren’t going to survive on that model,” co-owner Chris Powers told DCist at the time.
Less than a year later, DC To-GoGo has closed its app.
https://dcist.com/story/22/03/22/dc-sues-grubhub/ DC is suing Grubhub over allegations that a third-party delivery app took advantage of restaurants and misled customers