Grubhub to Pay $24M to Customers and Couriers Over Deceptive Ads and Violations
Photo: TechCrunch
Quick answer
Grubhub is paying $23.8 million to 640,000 customers and couriers following FTC allegations of deceptive practices, including misleading earnings ads, account suspensions, and unauthorized restaurant listings.
U.S. food delivery service Grubhub has begun distributing $23.8 million in payments to over 640,000 customers and couriers. The funds are being disbursed as part of a settlement with the U.S. Federal Trade Commission (FTC) and the Illinois Attorney General, who filed a lawsuit against the company in December 2024.
The lawsuit alleged that Grubhub misled couriers about potential earnings, restricted user access to accounts and funds, and listed restaurants on its platform without their consent. According to the FTC, up to 325,000 establishments were featured on Grubhub without contractual agreements. In some cases, the company refused to remove restaurants even after requests, instead offering paid partnerships.
Under the settlement, Grubhub has agreed to revise several practices. The company must now provide more accurate earnings information to couriers, allow customers to appeal account suspensions, and obtain consent from restaurants before listing them on the platform. Payments are being made via mail checks or PayPal.
This is not the first major lawsuit against Grubhub. A month earlier, a California federal court approved a $25 million settlement for 60,000 couriers. Similar issues have plagued other delivery services: DoorDash faced criticism over courier payment terms, while Uber Eats was scrutinized for disputed customer charges and restaurant relations.
Common questions
- Why is Grubhub paying compensation?
- Grubhub was accused of misleading couriers about potential earnings, suspending customer accounts without appeal options, and listing restaurants on its platform without consent. The FTC mandated a $23.8 million payout to affected parties.
- What changes will Grubhub implement after the lawsuit?
- Grubhub must provide more accurate earnings information to couriers, allow customers to appeal account suspensions, and obtain consent from restaurants before listing them on the platform.
- Have other delivery services faced similar issues?
- Yes, DoorDash and Uber Eats have faced criticism for courier payment practices and restaurant relations. DoorDash was accused of unfair pay, while Uber Eats faced disputes over unauthorized customer charges.
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