Grubhub to Settle Charges of Consumer Protection and Competition Violations

Grubhub will pay $25 million and make several changes to its operations to settle charges that it violated consumer protection and competition laws.

The proposed settlement covers charges from the Federal Trade Commission (FTC) and the Illinois attorney general, the FTC said in a Tuesday (Dec. 17) press release.

Those charges alleged that Grubhub deceived diners about delivery costs, blocked their access to their accounts and funds, deceived workers about how much money they would make delivering food, and listed restaurants on its platform without their permission, according to the release.

“Today’s action holds Grubhub to account, putting an end to these illegal practices and securing nearly $25 million for the people cheated by Grubhub’s tactics,” FTC Chair Lina M. Khan said in the release. “There is no ‘gig platform’ exemption to the laws on the books.”

“This settlement is the culmination of a multiyear investigation into deceptive and illegal business practices perpetrated by Grubhub,” Illinois Attorney General Kwame Raoul said in the release.

Grubhub said in a Tuesday press release that it has cooperated with the FTC for years as the agency reviewed its business, that it appreciates the ongoing dialogue with the FTC, and that it will make changes to its platform “to make it even easier for diners to understand the fees we charge, how we advertise earnings potential for delivery partners, and how we communicate about Grubhub+, among other updates.”

“At Grubhub, we’re committed to transparency so that every single day diners, restaurants and drivers can make well-informed choices to do business with us,” the release said. “While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward.”

Grubhub was sold to food delivery startup Wonder in November after a two-year search for a buyer by its previous owner, Just Eat Takeaway, PYMNTS reported at the time.

Wonder will pay $650 million to purchase Grubhub after Just Eat Takeaway paid $7.3 billion to buy it in 2021.