Grubhub to Pay $25 Million Settlement for Misleading Practices
Food delivery giant Grubhub has agreed to a $25 million settlement with the Federal Trade Commission (FTC) and Illinois Attorney General Kwame Raoul following allegations of deceptive business practices affecting customers, drivers, and restaurants. The settlement resolves claims of hidden fees, inflated driver earnings, and unauthorized restaurant listings on its platform.
Key Allegations in the Lawsuit
- Misleading Pricing: Grubhub allegedly concealed true delivery costs, with final prices often doubling initial estimates due to undisclosed “service fees” or “small order fees.”
- Driver Wage Misrepresentation: The company advertised inflated hourly pay rates that drivers rarely achieved in practice.
- Unauthorized Listings: Over 325,000 restaurants were listed on Grubhub’s platform without their consent, harming both businesses and consumers.
Settlement Terms & Grubhub’s Response
Under the proposed agreement, Grubhub must:
- Cease deceptive pricing tactics
- Stop misrepresenting driver earnings
- Remove unaffiliated restaurants from its platform
In a public statement, Grubhub denied the allegations, calling them “wrong, misleading, or no longer applicable.” However, the company stated that settling was in its “best interest” to move forward.
Why This Matters
This case highlights ongoing scrutiny of food delivery platforms’ transparency. For consumers, it underscores the importance of:
- Reviewing final order totals carefully
- Researching driver pay structures if considering gig work
- Verifying restaurant partnerships on third-party apps
The FTC’s action signals tighter enforcement of digital marketplace fairness. Read the full complaint here.
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