Grubhub customers and drivers to receive $23.8 million in settlement payments
Hundreds of thousands of Grubhub drivers and customers will soon receive payments totaling more than $23.8 million under a settlement agreement over allegations of deceptive practices.
The Chicago-based company behind the popular food delivery app reached a $25 million settlement with the Federal Trade Commission and the Illinois Attorney General Kwame Raoul's office in December 2024.
Raoul's office announced on Thursday that the FTC will send out payments totaling more than $23.8 million to 640,038 Grubhub drivers and customers, who will either receive checks in the mail or electronic payments via PayPal.
"I am pleased that customers and drivers will soon see relief for the harm caused by Grubhub's unlawful actions, and I remain committed to holding businesses like Grubhub accountable for unfair and deceptive business practices," Raoul said in a statement.
The FTC said those who receive a refund check should cash it within 90 days. Those who receive a PayPal payment should accept it within 30 days.
A federal lawsuit filed by the FTC and Raoul's office accused Grubhub of baiting customers with low delivery fees, only to tack on additional fees often labeled as "service fees" or "small order fees" that were simply delivery fees in disguise.
Grubhub was also accused of misleading users about its Grubhub+ subscription service, claiming it offered free delivery, while still charging subscribers for delivery, and making it difficult to cancel Grubhub+ subscriptions.
The FTC and Raoul's office also found that Grubhub exaggerated how much drivers could make working for the food delivery app.
According to the lawsuit, Grubhub advertised that its drivers were likely to earn $26 per hour, when the vast majority never received that much. In reality, the complaint claims the median Grubhub driver earned $11 per hour in 2023, and only the top 2% of drivers earned the promised hourly pay.
The complaint also claims Grubhub resorted to adding tens of thousands of restaurants to their platform without their knowledge or consent in order to draw in more users, often using outdated menus, routinely leading to canceled orders, delays, or missing items.
In some cases, because delivery drivers could only pay for orders using Grubhub credit cards that were sometimes declined for insufficient funds, restaurants were often left unpaid for food that was already prepared.
The FTC said thousands of restaurants even sent cease and desist letters to Grubhub, demanding they be removed from the platform, but Grubhub would routinely ignore these requests, and sometimes then pressure restaurants to pay to join the platform.
Grubhub has said said they "categorically deny" the allegations in the lawsuit, but they believe it is in the best interest of the company to pay the money and move forward.
Without admitting fault, Grubhub agreed to pay a suspended judgment of $25 million, and according to a statement, "will make changes to its platform to make it even easier for diners to understand the fees we charge, how we advertise earnings potential for delivery partners, and how we communicate about Grubhub+, among other updates."
Grubhub customers or drivers who have questions about their payment should contact the refund administrator, Analytics Consulting LLC, at 888-446-4992, or visit the FTC website to view frequently asked questions about the refund process. The FTC never requires people to pay money or provide account information to get a payment.
