Chicago sues DoorDash, Grubhub for allegedly deceiving customers

  • The City of Chicago filed two sweeping lawsuits against DoorDash and Grubhub for allegedly deceiving customers and using unfair business practices.
  • The suits echo long-standing claims from restaurants on the platforms.
  • The DoorDash complaint also alleges deceptive tipping practices previously charged and settled by the D.C. attorney general.

In this article

  • DASH

The City of Chicago filed two sweeping lawsuits against DoorDash and Grubhub for allegedly deceiving customers and using unfair business practices.

The suits echo long-standing claims from restaurant owners that the platforms advertise delivery services for their businesses without their consent and conceal lower prices that restaurants offer directly to customers, outside of the platforms.

The city also claims both platforms use a "bait-and-switch" method to attract customers with low delivery fees, only to charge additional ones when they are about to place their order.

In separate statements, both DoorDash and Grubhub called the lawsuits "baseless."

A DoorDash spokesperson said the company "has stood with the City of Chicago throughout the pandemic, waiving fees for restaurants, providing $500,000 in direct grants, creating strong earning opportunities, and delivering food and other necessities to communities in need." 

In November, DoorDash stopped adding new restaurants that it doesn't have agreements with to its app. It also said it will remove restaurants that don't want to be listed within 48 hours of being notified.

"Every single allegation is categorically wrong and we will aggressively defend our business practices," a Grubhub spokesperson said in a statement. "We look forward to responding in court and are confident we will prevail."

The city is seeking to end the alleged misconduct by mandating more transparency, civil penalties and restitution for consumers and restaurants hurt by their alleged practices.

The suits include additional claims specific to each company.

The city alleged that Grubhub deceptively shared telephone numbers for customers to connect with restaurants, but would charge the restaurants a commission for calls placed through those numbers, even when they didn't result in an order. The city also claimed Grubhub made "imposter websites" for restaurants to unexpectedly lure customers to its own platform.

The suit claims Grubhub's marketing campaigns promoting local restaurants during the pandemic were deceptive, while it allegedly forced restaurants to extend their contracts and cover promotion costs. It also alleged Grubhub violated Chicago's 15% emergency cap on commissions delivery platforms could take from restaurants.

The city claimed DoorDash misled customers about how their tips for drivers would be used. This issue has been the subject of a separate lawsuit from the attorney general of the District of Columbia. DoorDash has said it changed its tipping method prior to the D.C. AG's suit. It reached a $2.5 million settlement with his office in November over those claims.

Chicago also alleged DoorDash misleadingly labeled a $1.50 fee placed on every order as a "Chicago Fee." The city claimed this wrongly implied the fee was required or paid to Chicago, rather than to DoorDash.

Subscribe to CNBC on YouTube.

WATCH: Delivery workers are risking their lives to bring people groceries during coronavirus — here's what it's like for them

Source: Read Full Article