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The Federal Trade Commission (FTC) announced that it will distribute over $23 million to Grubhub users as part of a settlement resolving allegations of deceptive practices by the food delivery service. This follows a $140 million settlement reached on December 17, 2024, with the FTC and Illinois Attorney General, of which Grubhub will pay $25 million due to its inability to cover the full amount.
The FTC accused Grubhub of misleading customers with hidden fees, which a former executive reportedly called a "pricing shell game." The company was also charged with deceiving drivers about their earnings and listing restaurants without their consent. Grubhub's settlement includes a commitment to change its business practices, ensuring transparency in delivery costs and honest advertising of driver pay.
FTC Chair Lina Khan emphasized the importance of the settlement, stating it holds Grubhub accountable for its actions. The settlement aims to address the negative impact on consumers, restaurants, and drivers. Grubhub, while denying the allegations, agreed to the settlement to move forward and improve its platform.
The settlement highlights the FTC's focus on "junk fees" and deceptive practices. It also underscores the collaborative efforts of state and federal regulators to protect consumers. The FTC warns that if Grubhub misrepresented its financial status, the full judgment would become due immediately.
For more details, visit Crowell & Moring, Blue Book Services, and Regulatory Oversight.