Washington DC Attorney General sues Grubhub over hidden fees

Washington DC Attorney General Karl Racine has filed a lawsuit against Grubhub over alleged hidden fees and other "deceptive trade practices." His office has accused Grubhub of violating the jurisdiction's Consumer Protection Procedures Act in eight separate ways.

"We're suing Grubhub for misleading District residents and taking advantage of local restaurants to boost its own profits," Racine wrote on Twitter. "Grubhub charges hidden fees and uses bait-and-switch tactics, all while pretending to help local businesses during the pandemic. This needs to stop."

Racine's office also claims the app charged users higher prices than they'd pay in restaurants and that it misrepresented an offer of "unlimited free delivery" with a Grubhub+ subscription, since customers still need to pay a service fee.

The suit alleges that Grubhub offered deliveries from more than 1,000 eateries in the area without restaurants' permission. It accused the company of listing phone numbers for restaurants that were actually routed to Grubhub workers and creating websites for restaurants without their consent or clearly disclosing that it operated the sites. Grubhub has ended those practices, as TechCrunch notes.

"In one of Grubhub’s most shameless moves, at the beginning of the pandemic, it ran a discount called 'Supper for Support,' ginning up business by claiming to help struggling restaurants, and then stuck restaurants with the bill," Racine said. "This program cut into struggling restaurants’ profit margins while padding Grubhub’s bottom line."

The promotion allowed restaurants to offer a $10 discount on orders over $30, but they had to cover the cost. Grubhub later offered them a $250 credit, as the suit notes.

"We are disappointed [the AG’s office has] moved forward with this lawsuit because our practices have always complied with DC law, and in any event, many of the practices at issue have been discontinued," Grubhub said in a statement. "We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.”

Grubhub says it has worked with Racine and his office over the last year to address concerns. In the wake of the lawsuit, the service is adding disclaimers about service fees for Grubhub+ subscribers and the fact prices may be lower at restaurants than in its app. Grubhub will also make it clearer that users can place orders for free through its app and website as long as they pick up food themselves. These changes will apply to everyone, not only users in DC.

The DC lawsuit is the latest in a number of legal battles over delivery apps' business practices. Chicago has also sued Grubhub (and DoorDash) over alleged deceptive delivery fees and charging higher prices for menu items than restaurants themselves do. In September, those two services and Uber Eats filed suit against New York City for placing limits on the fees they can charge restaurants.