Grubhub’s $25 Million Settlement with FTC: Impact on Diners, Workers, and Small Businesses
Grubhub, a popular food delivery service, has agreed to a $25 million settlement with the Federal Trade Commission (FTC) and Illinois Attorney General Kwame Raoul. This settlement comes after allegations of harmful practices that affected diners, workers, and small businesses. The FTC announced the resolution on Tuesday, shedding light on the deceptive tactics used by Grubhub that led to this legal action.
What Happened?
The complaint against Grubhub includes claims that the company misled diners about delivery costs, blocked access to their accounts, and deceived workers about their potential earnings. Additionally, Grubhub was accused of listing restaurants on its platform without their permission, damaging the reputations and revenues of those establishments. These practices were allegedly done to drive growth and expand the company’s reach, but they came at a cost to consumers, workers, and small business owners.
The Impact
With as many as 325,000 unaffiliated restaurants on its platform, Grubhub’s actions had far-reaching consequences. Diners often had to pay higher delivery fees for these restaurants, leading to a negative impact on their reputations. The company would also reportedly refuse to remove unaffiliated restaurants from the platform when requested, instead pushing them towards paid partnerships. This lack of transparency and accountability left many stakeholders feeling deceived and exploited.
The Resolution
As part of the settlement, Grubhub has agreed to make significant changes to its practices. This includes stopping the addition of surprise fees, being more transparent about driver earnings, notifying customers if their accounts are blocked, and providing easier ways to cancel memberships. These measures aim to address the issues raised in the complaint and prevent similar practices in the future.
Moving Forward
The settlement also includes a monetary judgment of $140 million, with Grubhub paying $25 million as part of the agreement. This money will be used to refund consumers harmed by the company’s actions. However, if Grubhub is found to have misrepresented its financial status, the full judgment would become immediately due. The company has stated that they negotiated in good faith with the FTC and provided extensive details about their business and financial performance.
In conclusion, the settlement between Grubhub and the FTC marks a significant step towards holding companies accountable for their actions. By addressing the harmful practices that have impacted diners, workers, and small businesses, this resolution aims to create a more transparent and fair food delivery industry for all stakeholders involved.
