Grubhub disputes allegations made by Los Angeles County in a lawsuit filed against the food delivery service Feb. 22 for allegedly charging excessive fees.
In the lawsuit, the county claims Grubhub uses unfair and deceptive business practices and seeks statewide relief to stop violations, including charging hidden fees at check-out, falsely telling customers not to tip drivers because of its “driver benefits fee,” and charging restaurants for customer refunds.
The county also asserts the company steers online customers to restaurants that have paid Grubhub for special placement during searches.
“The deceptive and excessive fees charged by Grubhub at checkout blatantly undermine our goal of promoting a fair marketplace where businesses, employees, and consumers can thrive,” said Rafael Carbajal, director of the Los Angeles County Department of Consumer and Business Affairs.
Mr. Carbajal claims the company’s practices inflict financial harm on residents, restaurants, and workers and are unacceptable.
Grubhub, which started delivery service in the county eight years ago, said March 1 that many of the county’s claims are incorrect.
“We work hard to support Los Angeles restaurants, diners, and drivers, and we continually review and enhance our operations to better serve them and meet their expectations,” a company spokesperson told California Insider in an emailed statement.
Grubhub has tried to engage in “constructive dialogue” with the County Counsel’s Office to explain the business and identify any areas for improvement, the company spokesperson added.
“We are disappointed they have moved forward with this lawsuit because our practices have always complied with applicable law, and in any event, many of the allegations are incorrect or have been discontinued,” the spokesperson said.
“We will aggressively defend our business in court and look forward to continuing to serve LA restaurants, diners, and drivers.”
County Counsel Dawyn R. Harrison filed the lawsuit last week in response to customer and restaurant complaints, she said. The county retained an outside law firm to seek a halt to the company’s business practices and civil penalties, according to a press release.
“Our lawsuit seeks to hold Grubhub accountable for their unfair and deceptive business practices that deceive and overcharge consumers, exploit drivers, and unfairly short-change restaurants on order refunds,” Ms. Harrison said in a statement.
According to Grubhub, the company repeatedly discloses all fees prior to a customer’s purchase. The terms of use also make it clear that fees may apply to orders placed with the company.
Also, all fees are disclosed in the order and checkout process before the order is placed. The fees are also listed in the order confirmation receipts and in marketing materials.
“Going forward, we will also add a link to additional fee disclosures on Grubhub menus for Los Angeles restaurants,” the company spokesperson said.
The company also said the allegation that it steers customers during searches to certain restaurants that have paid extra for promotion is incorrect. Grubhub considers location, restaurant category, and the consumer’s past ordering behavior when determining how options appear in searches, . the company says.
Regarding drivers’ tips, the company said it does provide information to its drivers about their benefits, but plans to update language diners see on its checkout page to clarify the benefits drivers get from the state’s Proposition 22. The proposition passed in November 2020 and regulates how delivery drivers are paid and requires that companies offer health insurance plans for certain drivers.
Responding to the claim about charging restaurants for customer refunds, Grubhub said it has discontinued the practice and has made it easier for restaurants to dispute a refund.
Grubhub delivers food, groceries, and alcohol from 13,628 restaurants and stores in the city, according to the company.
The service is part of Just Eat Takeaway.com, a global online food delivery marketplace. The company has about 3,000 employees and delivers food in 4,000 U.S. cities.
