DC sues Grubhub for allegedly employing deceptive practices

By Brian Fung, CNN Business

The attorney general of Washington, D.C. announced Monday he is suing Grubhub, alleging that the company harmed consumers during the pandemic by charging hidden fees and by misleading consumers about them using so-called “dark patterns” — along with a battery of other claims.

The food-delivery service, which grew in prominence over the pandemic as in-person dining shifted to takeout and delivery orders, said in response Monday that the company supports DC restaurants and has sought to work with Racine’s office over the past year to address its concerns.

“We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC law,” a Grubhub spokesperson told CNN. “Many of the practices at issue have been discontinued. We will aggressively defend our business in court and look forward to continuing to serve DC restaurants and diners.”

In his Monday complaint filed in DC Superior Court, Attorney General Karl Racine alleged that Grubhub has violated the District’s consumer protection laws and is not transparent about the fees it charges users, saying the company does not display additional service fees in the way it prominently displays delivery fees.

“Until recently, Grubhub further obscured these additional fees by grouping them with taxes at checkout,” Racine’s office alleged in a statement. “This practice constitutes a ‘dark pattern’ — a design feature that deceives, coerces, or manipulates consumers into making choices that are either not what they intended, or not in their best interests.”

Racine’s suit claims Grubhub’s advertising is misleading by presenting free online orders and delivery as a universal feature, when only a subset of customers are actually eligible, according to the complaint.

The DC government also claims that Grubhub harmed restaurant owners with a pandemic-related promotion created for the purported benefit of local restaurants, but which instead allegedly “passed most of the costs of the discounts along to the already-struggling restaurants” while still requiring the restaurants to pay their normal, full commission on orders under the promotion.

And Grubhub allegedly took a number of misleading steps at various times to drive traffic to its platform, the complaint alleges, including by listing restaurants on its site without consent, creating non-official phone numbers for restaurants in a bid to generate more Grubhub orders and creating non-official websites for restaurants that routed visitors to Grubhub.

Racine’s complaint seeks a jury trial and restitution and civil penalties against the company.

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