Chicago has taken food delivery service Grubhub, DoorDash and other Chicago-area businesses to court.
The lawsuit, described in an Aug. 27 news release from Mayor Lori Lightfoot’s office, alleges that the two companies have been “engaging in deceptive and unfair business practices that harm restaurants and mislead consumers.” It is asking for changes in the operation of each company (in terms of transparency, restitution to customers and restaurants, as well as fines).
Lightfoot made the following statement:
We faced a pandemic in the form of a worldwide epidemic that decimated businesses and forced people into shelters. The defendants’ apps for meal delivery became an important way to feed your family and support local restaurants. These companies used unfair and deceptive techniques to profit from consumers and restaurants struggling to survive during extremely difficult times. It’s deeply troubling and regrettable.
According to the release by the mayor’s offices, there are allegations for each individual as well as for all. Grubhub’s and DoorDash’s lawyers assert that they both advertised their delivery and order services to restaurants without any connection to these platforms.
According to the city, both firms used bait-and-switch tactics. They emphasized small delivery charges upfront and then added additional fees at the conclusion of each order. According to the release, “This raises the delivery cost by up to six times what was initially advertised.” The menu prices were also “significantly” more expensive than ordering directly from the restaurant.
Chicago’s case reveals that Grubhub used telephone “routing” numbers to misrepresent themselves as calling a restaurant. It also “regularly,” charged restaurant commission fees for calls that didn’t result in an order. Grubhub created “impostor” websites to send people to restaurants. Grubhub violated Chicago’s 15% “emergency limit” on restaurant commissions. The company was alleged to have taken a larger cut than what Chicago’s pandemic relief laws allowed.
The statement also alleges that DoorDash misled customers regarding tips being paid to drivers; added $1.50 to every city order, misleadingly implying that the fee was required or paid by Chicago, when it was actually DoorDash.
DoorDash spokesperson said in response that the lawsuit was unfounded: This is an outrageous waste of taxpayer money and Chicagoans need to be angry. DoorDash supported Chicago during the pandemic by waiving restaurant fees, providing $500,000 direct grants and creating strong earnings opportunities. DoorDash also delivered food and other essentials to those in most need. The lawsuit won’t cost the taxpayers, and will deliver absolutely nothing.
The city also issued a statement refuting several claims in the suit. The company maintains that its “Dashers”, the term used to describe delivery drivers, have received 100% of their tips. DoorDash notes that although new restaurants have not been added to its site since Nov. 2020 (the date when they were first added), they didn’t pay any fees. They also noted that those who had previously been added could opt out and would be removed in 48 hours.
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Mashable reached out to Grubhub as well for a statement but no response was available at press time. The company had this to say in a statement provided to The Verge: “We are deeply disappointed by Mayor Lightfoot’s decision to file this baseless lawsuit. We will vigorously defend our business practices and every allegation we are made against is false. We are looking forward to responding in court, and we believe that we will win.
Chicago’s lawsuit wasn’t born in a vacuum. In one example, a 2020 report detailed the Grubhub practice of listing non-partner restaurants on its ordering site. Another example is one that contradicts DoorDash’s assertion that Dashers always received full tips. DoorDash was forced to modify its tipping system in 2019. It paid $2.5 million to settle a year later, after discovering that the tips had been used to subside delivery worker payments.
This is all to say that Chicago has a long history. DoorDash or Grubhub may both claim that things are certain, but this doesn’t necessarily mean all claims are true. This is why the legal system exists. Keep watching.
Publited Sat, 28 August 2021 at 22:53:03 +0000