CHICAGO (WLS) — Illinois Attorney General Kwame Raoul announced a $25 million settlement with delivery service app Grubhub Tuesday.
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The announcement was made with Federal Trade Commission Chair Lina Khan and FTC Midwest Region Director Jason Adler.
The settlement was reached after a multi-year investigation into what the agencies called “deceptive and illegal business practices.”
“In the last five years, my office has received nearly 50 consumer complaints regarding Grubhub. So, I directed our consumer fraud bureau to open an investigation,” Raoul said.
The unlawful practices harmed diners, workers and small businesses, the FTC and Illinois said.
“Our joint investigation found that, for years, GrubHub deliberately and systematically cheated its customers, deceived its drivers and undermined restaurants that did not partner with GrubHub,” Khan said.
Raoul said the deceptive trade practices complaint was filed in federal court in Chicago.
It says the company deceived diners about delivery costs and drivers about how much they would make delivering food.
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Nolberto Casas drives for GrubHub on the weekends, and says he makes less than the $14-an-hour he was promised.
“They’ve been saying you can make ‘X’ amount of money per hour, and it turns out you’re out there working for hours, and you’re not making what they guaranteed, even if you do schedule blocks of time,” Casas said.
What’s more, the regulators say GrubHub listed certain restaurants on its platform without their permission, and, in some cases, despite their objections.
That was all in an attempt allegedly to accelerate the food delivery company’s growth.
“Unaware of GrubHub’s deception, unhappy customers blamed the restaurants, leading to reputational harm and lost revenues,” Khan said.
As part of the settlement, GrubHub will be required to:
– Disclose all delivery fees
– Provide drivers with proof of potential earnings
– Remove any unaffiliated restaurants
“While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward,” the company said in a statement.
Nearly all of the $25 million will be used to refund consumers harmed by Grubhub’s conduct.
The FTC will be identifying those consumers, and determining how to distribute the money.
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