WASHINGTON — Have you used Grubhub in the District? If your answer is yes, you could be entitled to payment thanks to a $3.5 million settlement.
The food delivery service has agreed to pay the settlement amount to D.C. customers after charging hidden fees as well as using deceptive marketing tactics to gain a profit, which is in violation of District consumer protection laws, according to the Office of the Attorney General Karl Racine.
This resolution, which was announced Friday, comes after the attorney general's office sued the company in March 2022 for alleged violations of the District’s Consumer Protection and Procedures Act (CPPA), which prohibits a wide variety of deceptive and unlawful business practices.
“Grubhub used every trick in the book to manipulate customers into paying far more than they owed, and even worse, they did so at the height of a global pandemic when District residents were already struggling to make ends meet,” Racine said. “Grubhub’s hidden fees and misleading marketing tactics were designed to get the company an extra buck at the expense of D.C. residents – but we’re not letting them get away with it. No company, big or small, can take advantage of D.C. residents without consequence.”
Grubhub will distribute the $3.5 million by:
- Paying back $2.7 million 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.
- The rest of the money, $800,000, will be paid as a civil penalty to the District.
After the D.C.-based lawsuit, Grubhub, which operates in more than 4,000 cities across the country, will have to make changes to its business practice to align with District law. This will help set a standard in the food delivery service when it comes to disclosing pricing information to customers.
According to the attorney's office, to ensure no future violations of the CPPA, Grubhub must:
- Prominently disclose to consumers when it presents search results that additional fees may apply at checkout;
- List the name and amount of each fee as a separate line item at checkout;
- Stop its practice of combining taxes and fees into one line item;
- Stop advertising that Grubhub+ subscribers receive “free delivery” and instead specify that the $0 delivery fee only applies to eligible orders and that other fees may apply;
- Stop charging menu prices higher than those available at the restaurant itself unless it clearly discloses, both on the menu and at checkout, that prices may be higher on Grubhub; and
- Shut down all microsites for restaurants located in the District or transfer ownership to the restaurant.