By Jody Godoy
(Reuters) -Grubhub reached a settlement on Tuesday with the U.S. Federal Trade Commission and Illinois Attorney General Kwame Raoul for allegedly misleading customers about ordering fees, adding restaurants to its platform without their consent and misleading drivers about the reward.
The settlement requires Grubhub to cease the practices and pay $25 million. The agencies sought a $140 million judgment against the company, but reduced it to what Grubhub can pay, they said. If Grubhub is found to have misrepresented its financial position, the full penalty will apply.
A Grubhub spokesperson said Tuesday that, “while we categorically deny the FTC’s allegations, many of which are false, misleading or no longer applicable to our company, we believe that settling this matter is in the best interests of Grubhub is and allows us to move forward.”
The food delivery platform hid charges until the last minute, misled Grubhub+ subscribers into believing they could avoid charges and blocked some customers from using their gift card balances, the lawsuit said.
Drivers were told they could earn up to $26 an hour, when in reality only the top 2% achieved those rates, the agencies said. And thousands of restaurants were added to the platform without their consent, resulting in order delays and customer complaints, the FTC and Illinois said.
“For Grubhub, these misrepresentations are a quick and cheap way to add restaurant offerings and build scale. But Grubhub’s deception hurts both restaurants and diners,” the agencies said.
The FTC and Illinois alleged that the practices violated federal and state law.
(Reporting by Jody Godoy in New York; Editing by Chizu Nomiyama)
