Grubhub to pay $25 million for deceptive prospects, eating places and drivers

By Jody Godoy

(Reuters) – Grubhub reached a settlement with the U.S. Federal Commerce Fee and Illinois Lawyer Common Kwame Raoul on Tuesday for allegedly deceptive prospects about ordering charges, including eating places to its platform with out their consent and deceived drivers about salaries.

The settlement requires Grubhub to stop its practices and pay $25 million. The companies sought a $140 million judgment in opposition to the corporate, however lowered it to what Grubhub is ready to pay, they mentioned. If Grubhub is discovered to have misrepresented its monetary scenario, the complete penalty will apply.

A Grubhub spokesperson mentioned Tuesday that “whereas we categorically deny the allegations made by the FTC, lots of that are false, deceptive or now not apply to our firm, we consider settling this matter is in the perfect curiosity of Grubhub and permits us to maneuver ahead.”

The meals supply platform hid the charges till the final minute, misled Grubhub+ subscribers into pondering they might keep away from the charges, and blocked some prospects from utilizing their card balances – presents, in response to the lawsuit.

Drivers have been advised they might earn as much as $26 an hour, when in actuality solely the richest 2 % received these charges, the companies mentioned. And 1000’s of eating places have been added to the platform with out their consent, resulting in order delays and buyer complaints, the FTC and Illinois mentioned.

“For Grubhub, these misrepresentations present a fast, cheap means so as to add restaurant choices and construct scale. However Grubhub’s deception harms eating places and diners alike,” the companies mentioned.

The FTC and Illinois alleged that these practices violated federal and state legal guidelines.

(Reporting by Jody Godoy in New York; modifying by Chizu Nomiyama)