Things can get really confusing here. To be clear, it isn’t the restaurants that are in the wrong, but Grubhub – after the app falsely claimed they were partners with those food establishments. Now, the app has agreed to pay $7 million in damages.
What happened
During the fourth quarter of 2019, Grubhub vehemently added 150,000 restaurants to help grow its network to as much as 300,000 restaurants as its position as leader in the United States as its restaurant delivery market share had been said to slip that time.
However, those restaurants are not their official partners.
This practice took them to receiving criticisms, backlash, and lawsuits, especially in restaurants that did not have the means or capacity to handle delivery orders or were receiving orders for incorrect menu items.
Interestingly, DoorDash and Postmates have also yielded to these practices, and received criticism for them as well.
Grubhub has admitted they were in the wrong, agreeing to pay a preliminary settlement in which it will pay around $7 million to restaurants that alleged the company harmed their reputations and credibility by falsely advertising them as partners.
But, after around five years, right?
Though Grubhub just dragged approximately 150,000 restaurants, there was a settlement class involving around 387,000 restaurants that accused the platform of signing them up as “partners” without their consent. Interestingly enough, Grubhub’s actions retreated, since the restaurants said it did not help them. Instead, it caused loss of sales.
“While the practices alleged in this case have not been part of our business model for some time, we’re pleased to settle this case so we can move forward and continue providing excellent value to the over 415,000 merchants who choose to partner with us every day,” the Grubhub spokesperson stated over the matter.
$25 million
Meanwhile, in a different case, Grubhub has agreed last holiday season to pay as much as $25 million and make several changes to its operations to settle charges it violated consumer protection and competition laws.
In this particular case, the Federal Trade Commission and the lawyer alleged that Grubhub deceived its diners on delivery costs, blocked their access to their accounts and funds, tricked workers on how much money they’d make delivering foods, and listed restaurants on its platform without their permission.
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