Food delivery service Grubhub will pay $3.5 million to settle allegations by the D.C. Office of the Attorney General the company charged customers hidden fees and used deceptive marketing techniques to increase profits.
D.C. residents with an active Grubhub account will share the bulk of that amount in the form of account credits.
“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,” then-Attorney General Karl Racine said in a Dec. 30 statement.
“Grubhub’s hidden fees and misleading marketing tactics were designed to get the company an extra buck at the expense of D.C. residents,” the statement said.
D.C. sued Grubhub in March 2022, alleging the company’s fee tactics violated the District’s consumer protection laws. Grubhub admitted to no wrongdoing in agreeing to the settlement.
As part of the settlement, $2.7 million will be paid back to affected customers. Those holding Grubhub accounts will automatically receive a refundable credit. If the credit is not used within 90 days, the money will be sent to customers in the form of a check.
The remaining $800,000 will be collected by the District as a civil penalty.
Grubhub will now prominently disclose all fees by name and line item at checkout. It must also clearly disclose if the menu prices on its app are higher than the menu prices at the restaurant from which customers are ordering. The full agreement can be read online.
Grubhub is the latest big tech firm targeted by the D.C. attorney general’s office. Last week, the District reached a $9.5 million settlement with Google over consumer location tracking. In early December, D.C. filed a lawsuit against Amazon for its delivery driver-tipping policies.
Racine, who served two terms as attorney general, did not for reelection and left office at the end of his term. Brian Schwalb was sworn in as D.C.’s new attorney general Jan. 2.
