Online food delivery platform Grubhub will pay $3.5 million for charging hidden fees from customers 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.
Active Grubhub users 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.
“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,” Karl A. Racine said in a statement.
The Grubhub food delivery platform operates in more than 4,000 cities.
In 2020 alone — as the pandemic limited indoor dining in many places, including in the Washington 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.