Overview
On February 21, 2024, Los Angeles County, on behalf of the People of the State of California, filed a lawsuit against Grubhub, one of the three largest meal delivery technology companies in the nation, for false advertising and violating the California Unfair Competition Law.
The lawsuit alleges that Grubhub engages in the following unfair and deceptive business practices and seeks statewide relief to stop these violations:
Harm to Consumers
- Deceptively advertises that consumers can place delivery orders online “for free” but then charges consumers fees on those orders at check-out.
- Uses bait-and-switch tactics to lure consumers with a flat, unqualified price for delivery upfront while adding deceptively labeled “service,” “small order” and “driver benefits” fees at checkout. In some cases, the costs of the fees exceed the cost of the food item ordered.
- Misrepresents restaurant search results on its apps and websites, telling consumers that the search results are based on relevance to the consumer’s query (e.g., “Chinese food near me”), when in fact, the results and rankings are based in part on how much restaurants have paid Grubhub for placement.
Harm to Drivers
Grubhub misrepresents the qualities, characteristics, and scope of the “Driver Benefits Fee,” which Grubhub charges consumers in connection with Proposition 22. Grubhub deceptively implies that the fee provides healthcare benefits to drivers and that consumers no longer need to tip their drivers because “they don’t have to depend on tips.”
Harm to Restaurants
Grubhub deceptively and unilaterally charges restaurants for customer refunds, which Grubhub issues without restaurants’ consent, and without verifying whether the customer or the restaurant was responsible.