Home / Business and Economy / Grubhub Scam Lawsuit: $23.8M Paid to Users
Grubhub Scam Lawsuit: $23.8M Paid to Users
14 Aug
Summary
- FTC sending over $23.8 million to affected Grubhub users.
- Grubhub accused of deceptive fees and driver pay claims.
- Settlement requires Grubhub to improve advertising and dispute processes.
Hundreds of thousands of Grubhub users are set to receive payments totaling over $23.8 million as part of a settlement with the Federal Trade Commission (FTC). The FTC announced on Wednesday that it would be sending out 640,038 checks or PayPal deposits to individuals affected by alleged deceptive practices.
The lawsuit, filed by the FTC and the Illinois Attorney General in December 2024, accused Grubhub of misleading customers with hidden fees. Initially advertised with a low, single fee, the company allegedly added "service" or "small order" fees that could double the cost of food. A former executive reportedly described this as a "pricing shell game."
Further accusations include Grubhub advertising non-existent partnerships with restaurants, leading to delivery issues and extra charges. Customers with large gift card balances also reportedly faced locked accounts, preventing fund usage.
The FTC also highlighted that Grubhub deceived its drivers by promising significantly higher earnings than realistic. Advertisements in New York City suggested up to $40 per hour for drivers, while the median pay was only about $10 per hour.
In response, a Grubhub spokesperson stated that while the company denies the allegations, settling is in its best interest. Grubhub has agreed to substantial changes, including honest advertising of driver pay, creating a dispute tool for blocked accounts, and only listing consenting restaurant partners.
Most recipients will receive a check, valid for 90 days, while PayPal payments must be redeemed within 30 days. Analytics Consulting LLC is overseeing the payment process.
