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On Wednesday, February 21, Los Angeles County filed a lawsuit on behalf of Californians against delivery giant Grubhub, accusing the company of false advertising and deceptive business practices. The complaint includes multiple allegations, including that Grubhub uses bait-and-switch tactics in pricing and ultimately misrepresents food prices to consumers. The complaint alleges that Grubhub has built its business by misleading consumers and restaurants, to the detriment of consumers, drivers, and restaurants.
The lawsuit shares similarities with complaints filed in Chicago and Washington, D.C., which accused Grubhub of deceptive business practices in 2021 and 2022, respectively. In Washington, D.C., Grubhub was ordered to pay a $3.5 million settlement and an $800,000 civil penalty in December 2022. That same month, Uber Eats worked with the city of Chicago to avoid a lawsuit from the city by paying $10 million in damages. Settlement in court.
Service fees have long been part of the consumer experience when using food delivery apps. However, the lawsuit alleges that GrubHub violates California law by collecting and not disclosing numerous fees, including fees for small orders, driver benefits, and other services. According to the complaint, GrubHub frequently advertises the option to “order online for free,” but does not actually waive fees at checkout. According to the complaint, the fees are embedded in a hidden drop-down menu rather than automatically displayed in the shopping cart, making them easy for consumers to overlook. The complaint further alleges that GrubHub does not deliver search results based solely on consumer queries or delivery distance, but instead takes into account “undisclosed paid marketing agreements.”
Delivery drivers are an important and integral part of the Grubhub ecosystem. One of Grubhub’s mandatory fees included in each delivery order is a “driver benefits fee,” which the company says “guarantees minimum wage and medical benefits so drivers don’t have to rely on tips.” It helps.” Grubhub is using the fees to fund its Proposition 22 mandate, which requires rideshare and delivery companies to provide drivers with benefits such as minimum compensation and health benefits. The lawsuit filed yesterday alleges that most drivers are ineligible for the health benefits because Grubhub requires a minimum of 15 hours of “driving time” each week. (Most drivers do not meet this standard every week; their time is only considered “involved” between the time they choose to accept an order and the time they drop it off.)
The complaint alleges that Grubhub misleads consumers with language that suggests all drivers in California are guaranteed health benefits through fees. Additionally, the complaint alleges that Grubhub’s language deceives consumers by suggesting that drivers are becoming less reliant on tips.
Eater has reached out to Grubhub for comment.
Restaurants have increasingly relied on app-based delivery services as an additional source of income, especially during the COVID-19 pandemic. For years, online delivery platforms such as Grubhub and UberEats have provided a convenient way for diners to discover and order food from restaurants, but consumers, independent contractors who deliver food, and frequent restaurants It also appears to contribute to the unbalanced relationship between High rate of refund requests. The lawsuit also alleges that Grubhub requested refunds from restaurants without vetting the accuracy of complaints against them. The restaurant will not be notified and will not have the opportunity to dispute the chargeback until the refund is issued.
The complaint alleges that the practice has caused financial harm to California restaurants, with one owner in Los Angeles County claiming in the complaint that the refunds “removed a quarter of the revenue his restaurant earned on Grubhub’s platform.” He is reported to have said,
This lawsuit, and others like it before it, raise questions about the sustainability of streaming apps’ operating model in Los Angeles. In recent years, fee caps and benefits for delivery and service workers have repeatedly been a source of debate and litigation in cities across the country. On July 1, a new California law will ban unadvertised service fees and surcharges on restaurant menus, and fast food workers recently formed a new minority union with SEIU. did.
But for now, Doin R. Harrison, the Los Angeles County attorney, said, “This lawsuit is an unjustified and fraudulent attempt to deceive consumers by overcharging them, exploiting drivers, and improperly modifying refunds for restaurant orders.” “We hold Grubhub accountable for its deceptive business practices.” She said her office is “committed to protecting county employees and residents and holding businesses accountable for violations of consumer and worker protection laws.”
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