Washington, D.C.'s attorney general has filed suit against Grubhub for allegedly "charging hidden fees and using deceptive marking tactics" during the COVID-19 pandemic.
The lawsuit alleges the food delivery company used deceptive marketing tactics "to increase profits at the expense of consumers and local small businesses," the Office of the Attorney General announced in a news release on Monday.
“Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic,” Attorney General Karl Racine said in the release.
“Grubhub charged hidden fees and used bait-and-switch advertising tactics—which are illegal. On top of that, the company deceived users with a promotion that claimed to support local restaurants during the heart of the pandemic. But in reality, this program cut into struggling restaurants’ profit margins while padding Grubhub’s bottom line," Racine said.
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Racine claims Grubhub violated the District’s Consumer Protection Procedures Act and harmed D.C. consumers by allegedly failing to disclose that prices are higher in the app than at restaurants, listing restaurants that did not sign up for the platform, creating fake websites the funneled users to Grubhub and other false advertisement tactics.
The lawsuit seeks for Grubhub to "end deceptive marketing practices, be truthful about prices and fees, provide restitution to affected consumers and pay penalties for violating District law."
In response, a Grubhub spokesperson gave the following statement:
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“We work hard to support DC restaurants and diners, and we continually review and enhance our operations to better serve them and meet their expectations. During the past year, we've sought to engage in a constructive dialogue with the DC Attorney General’s office to help them understand our business and to see if there were any areas for improvement. We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC law, and in any event, many of the practices at issue have been discontinued. We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.”
Grubhub operates in more than 4,000 cities the United States. Consumers can order food through the website or app which then connects them with a "gig economy" worker that delivers the food to the consumer.
Food delivery companies like Grubhub make money by charging consumers fees and charging fees and commissions to restaurants. Racine's office said Grubhub made about $1.8 million in revenue in 2020.