Washington: Popular online food delivery platform Grubhub will pay $3.5 million for charging customers hidden fees and using deceptive marketing techniques to increase profits in violation of consumer protection laws in the US.
Grubhub will pay $800,000 to Washington, DC as a civil penalty while the remaining $2.7 million “will be paid back to the 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.
DC Attorney General Karl A. Racine said that 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,” said A.G. Racine.
“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,” he said in a statement.
Grubhub is a food delivery company that operates in more than 4,000 cities across the country.
In 2020 alone — as the pandemic limited indoor dining in many places, including in the District — Grubhub generated approximately $1.8 billion in revenue.
In March 2022, the Office of the Attorney General (OAG) sued Gruhub for alleged violations of the District’s Consumer Protection and Procedures Act (CPPA), which prohibits a wide variety of deceptive and unlawful business practices.
Under the CPPA, it is illegal to make misrepresentations about products or services, or to provide products or services that violate other District laws.