Grubhub to Pay $3.5M Settlement to DC Over Allegations of Hidden Fees

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Dive Brief: Grubhub has agreed to a $3.5 million settlement with Washington, D.C. Attorney General Karl Racine following a March lawsuit by Racine that alleged the company engaged in deceptive and illegal business practices . Grubhub will pay $2.7 million to affected customers. Active Grubhub customers will receive a refundable credit or check if credit is not used within 90 days. Another $800,000 will be paid as a civil penalty to the district. Racine alleged that Grubhub charged hidden fees and used deceptive marketing tactics designed to earn the company an extra dollar at the expense of DC residents. Overview of the dive:

Following that settlement and a $125,000 settlement in November with Pennsylvania, Grubhub said on its website that it is providing further clarification of its policies to all affected parties.

We agreed to this settlement to put this litigation behind us and continue to move our business forward, a Grubhub spokesperson wrote in an email to Restaurant Dive. We remain committed to ensuring transparency throughout the ordering process for our diners and restaurant partners.

This clarity includes the explanation that additional charges might apply to Grubhub+ members even though the program offers free shipping. This disclosure will include an explanation that free shipping only applies to qualifying orders. The company will provide a fee link explaining the fees customers may be subject to. It will also stop combining taxes and fees on one line and show the name and amount of each fee on a separate line during checkout.

Grubhub has also agreed to stop charging menu prices that are higher than the restaurant’s unless there is a clear explanation, both on the menu and at checkout, that prices might be higher on the platform.

He also agreed to shut down any microsites he created for restaurants in the district. Grubhub had previously said that these sites were part of contracts signed in the past with restaurants and that it no longer provided the service.

This latest regulation follows the attorney general’s office’s focus on ensuring that gig economy businesses abide by the same laws as brick-and-mortar businesses. including a service charge that looked like tips for the workers.

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