Grubhub , has agreed to pay$ 25 million and put an end to practices that included misleading customers over the costs of using the food delivery service and listing restaurants without their consent under a proposed settlement with the , Federal Trade Commission  , and , Illinois , Attorney General , Kwame Raoul ‘s , office, the agencies said on Tuesday.
Most of the money from the$ 25 million settlement with the , Chicago-based company is to be returned to customers, drivers and affected businesses nationally,  , FTC Midwest Region , Director , Jason Adler , said.
At a press conference in Chicago, Raoul stated that the arrangement is” the culmination of a yearlong investigation into false and unlawful business practices.”
FTC Chair , Lina Khan , keyed in on Grubhub’s says of lower or nonexistent shipping costs for customers including Grubhub Plus clients. She claimed that these innings were deceptive because the business frequently included an more” service fee” at the checkout.
Franchises complained that they were listed on , Grubhub , without their consent, causing problems as users often ordered off wrong or outdated recipes or during the wrong time, Khan said. That ended up damaging the identities of companies that were unable to fulfill , Grubhub , orders, she said.
Grubhub , likewise deceived individuals over how much money they’d produce, according to the , FTC. A , Chicago , ad campaign said drivers could earn up to$ 26 an hour but the median pay for drivers was actually$ 11 an hour and “less than 2 % of drivers made the advertised amount”, the , FTC , said. In , New York City, just 1 in 1, 000 individuals made$ 40 an hr, which was the number advertised in an advertising campaign that, according to the company.
The company may be required to publish” the true cost of shipping and stop adding rubbish fees” in the proposed arrangement, which requires authorization from a national judge. Additionally, Adler said, it would need to remove any affiliated restaurants from its platform and just add those locations with their permission in the future. Any statements about potential income for motorists would have to be backed with facts, the , FTC , said.
Anyone who is determined to be entitled to compensation from the settlement may be contacted by the FTC, according to Adler.
Khan cited the case as an illustration of the privileges required for both employees and customers in the job market, which flourished during the pandemic.
” This event is the latest episode of the FTC’s efforts to ensure that all of our businesses are good, honest and aggressive, including in the job market, where employees can experience greater precarity”, Khan said.
A , Grubhub , director denied the FTC’s allegations but said the arrangement was the company’s best choice.
” While we absolutely deny the claims made by the , FTC, many of which are bad, false or no longer relevant to our company, we believe settling this matter is in the best interest of , Grubhub , and allows us to move ahead”, the spokesperson said.
It could be one of the last actions that Khan takes as head of the , FTC, as President-elect , Donald Trump , has announced plans to replace her following aggressive antitrust and consumer protection moves by the Biden administration.
FTC Commissioner , Andrew Ferguson, Trump’s pick to lead the , FTC , in his administration, issued a statement in which he said that he agreed with some of the agency’s claims against , Grubhub , but not all of them. He specifically took issue with the inclusion of a count that alleged , Grubhub , engaged in unfair competition by listing restaurants without their consent.
The complaint and proposed settlement were filed in federal court in the , Northern District , of , Illinois , on Tuesday, Adler said. It won’t be final until the court reviews it and signs off, he said.
Grubhub , still faces a lawsuit filed by the city of , Chicago , over similar issues. The city is also suing , DoorDash, another food delivery company. A city spokesman said on Tuesday that the parties are still engaged in the discovery process and that she would not comment further.
Grubhub, which was founded in , Chicago , in 2004, is being sold to , Wonder Group, a , New York-based food delivery startup, for$ 650 million in a transaction that’s expected to close in the first quarter of next year.
Khan in her role leading the , FTC , has made taking on tech and gig work giants a major part of her work and legacy. She claimed that many city-based staff members who worked in the city were part of the process that led up to the settlement that was announced on Tuesday and looked at platforms systemically.
” In recent years, the , FTC , has brought enforcement action against a slew of gig firms”, she said, “making clear that there is no gig firm exemption for the laws on the books”.
___
© 2024 Chicago Tribune
Distributed by Tribune Content Agency, LLC.
