DC AG Sues Grubhub For Sneaky Fees, Screwing Over Local Restaurants
from the not-so-innovative dept
U.S. regulatory enforcement and punishment for companies that rip consumers off with sneaky fees is not what you’d call… consistent. For example, the telecom and cable industries have long exploited a wide array of bullshit fees to jack up advertised prices with only fleeting penalties. The same can be said for the banking, airline, hotel, and numerous other industries that happily nickel-and-dime users.
At some point, it became the regulatory policy norm in the United States to tacitly approve ripping your customers off, provided you’re just marginally clever about it. Punishment for falsely advertising lower prices or ripping consumers off can often be hard to come by.
Last week, District of Columbia Attorney General Karl Racine noted he’d be suing Grubhub for both misleading fees and a variety of other dodgy business practices:
“Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic,” said AG Racine. “Grubhub charged hidden fees and used bait-and-switch advertising tactics—which are illegal.
What also got Grubhub into trouble was a marketing promotion they launched that provided users “discounts” the company said would go toward helping struggling restaurants during the COVID crisis. Instead, Grubhub simply passed on the revenue loss to local DC restaurants:
“But Grubhub didn’t fully cover the costs of these discounts. Instead, it passed most of the costs of the discounts along to the already-struggling restaurants. Grubhub also forced the restaurants to pay its full commission—based on non-discounted prices—on the discounted orders. This promotion severely cut into restaurants’ already-small profit margins, and misled DC residents who believed their orders through Grubhub would help their favorite restaurants.”
Classy! Innovative!
Of course broadband providers ripped users off during the pandemic in a variety different ways including completely arbitrary and unnecessary fees, and not a single one faced any penalty whatsoever. So while this may be a welcome development and fitting punishment for Grubhub, government crackdowns on the exploitation of consumers by sneaky fees remains inconsistent.
Filed Under: apps, consumer rights, fees, food delivery, gig economy, karl racine, restaurants, take out
Companies: grubhub
Comments on “DC AG Sues Grubhub For Sneaky Fees, Screwing Over Local Restaurants”
The gig economy at large is an unsustainable fucking scam built upon lies about “innovation” and VC money being shoveled into the boiler to keep it propped up. I welcome any and all action taken to turn the screws on them.
Re:
20% to 30% fees on business that might have a 5% profit margin if they’re lucky.
What could possibly go wrong!
I know those may not be exact percentages, only meant to illustrate the scam.
Re: Off base
TFS is about restaurants being ripped off, not about gig workers. Do try to keep up, eh…..
And straighten up your gig line, you’re looking sloppy!
Re: Re:
Not really off base. GrubHub is a major Gig Economy player, and this article is Filed Under ‘Gig Economy’ among other things.
Re: Re: Re: Sorry,
I missed that part about where it was filed, but nonetheless, just because GrubHub is about gig workers, that doesn’t mean that restaurants being ripped off should somehow mean that filing TFS under “gig economy” is a good thing…. that was a bad decision on someone’s part. I mean, who wants to wade through “gig economy” and see things like “restaurant ripped off”? The first thing in their mind will be “WTF…” (And they’ll waste time looking to see what the connection might be.)
Re: Re: Re:2
The connection is blindingly obvious. It’s a gig economy company doing the ripping off.
Re: Re: Re:3 Sorry (redux)
No, it’s a company ripping off other companies. The fact that the GrubHub uses gig workers is not relevant – they could be using standard employees, and still be ripping off the restaurants.
Please, stop trying to mix the two together, they are entirely separate concepts. The gig economy does not have to rip off anyone, and thieves are not limited in how they rip off anyone. Is that blindingly obvious enough for you?
The difference is, Grubhub didn’t do enough to pay off the right politicians.
Re:
Beat me to it, their crime isn’t misleading prices it’s that they didn’t buy enough politicians before rolling them out.
Call Direct!
I noted the onerous “fees” when ordering from local restaurants online. Hence me forward ALWAYS calling the restaurant directly to place my order for delivery.
Only good thing online menu’s offer is a means of comparison shopping–Caveat Emptor”Buyer Beware”
Wait,… why would the buyer need to be aware of the seller? or intermediary, in this case, hhmm,…
Careful, people might think we live in a nation where there are different tiers of law depending on how powerful you are.
Breah of contract
There have been accusations that GH –without restaurant approval– makes up websites for businesses, takes orders, becomes a middleman, marks up the prices, and pocket the difference. That is likely actionable.
Then there are those restaurants that have signed dontracts with GH, accept orders from GH, and discount the items sold via GH so GH profits without making GH’s item pricing different than the restaurant’s own pricing. Then when GH discounts product further and has the restaurant eating those discounts, that is likely covered in the agreement between the parties. A violation of contractual terms, freely entered, between two parties is a civil matter, not public prosecutor fodder.
If, however, these discounts are not covered by the agreement,then there’ possibly fraud or conversion here. given that the restaurant can reject GH orders let alone use DoorDash, UberEast, Posmates, etc. instead it would appear they have many recourses.
This may seem unlikely unless your GH search inclludes –at the bottom– buttons to add speficic restaurants. Restaurants that have interest in them are offered the opportunity to get GH-provided business.
Here in sunny Tucson Arizona restaurans participated in the 59% off credit card program. The program would “give” restaurants cash to make it through the hot desert summer, and in return, customers used an affiliate card for 50%.
It was only after the restaurant had used up the cash and was stuck with its Faustean Fate that it commplained about it being unfair. This too is not the DA’s issue.
Whenever an election is afoot, public officials running for “a better office” grandstand. See, eg. Kamala Harris publicly arresting and jailing BackPage corporate executivesl They owned a site, cooperated with law enforcement, an yet Kamala Harris put on A Big Show about these evil men committing sex trafficking.
In sum,under most circumstances the DA has no business interjecting itself into a crime-free civil matter.
E
The part that bothers me is these delivery companies jack up the prices and charge fees. I’m okay with the delivery fees and tipping the driver, but if you order for a restaurant you’re familiar with, you’ll notice that the kung pao chicken didn’t used to be $15. Then you check the official website and see that it’s still $11 and just all of the prices are jacked up by the delivery company.
Grub Hub is into the Gig bit all right
Got a single meal from GH ONCE. The order was a complete disaster. Called the Restaurant as I know the owners and I’d been a happy customer for years and years. Didn’t even need to see the menu, the staff would ask “Meal A or B?” and blam! there it was with the ONE THING I had to have changed. (I hate it when someone goes to a restaurant then spends 20 minutes changing the order to their particular taste. It just bugs the hell out of me but hey, it’s their food so I don’t say a word about it.) They said they don’t use GH. That was enough. About six months later, I noticed a $10USD charge every month from GH. So I called and GH said “We’ll reverse all six months”. Yeah, that didn’t happen.
So GH is into the “Gig” economy all right. They’ll GIG YOU is the experience and opinion I have.
Hidden price hikes v. underestimated costs
I share the OP’s desire for truth-in-advertising for prices, so dismally absent in the USA. Europeans correctly build “value added tax” into advertised prices, while the US custom of adding “sales tax” to the advertised price became a first step for scammers.
The DC AG’s lawsuit is a step (one in thousands needed) in the right direction.
Nevertheless, during the pandemic, there seemed to be widespread unrealistic expectations about the cost of home delivery, that it should cost the restaurant customer nothing. Really? But I suppose outfits like Grubhub may have been at the bottom of it, planning to make profits from both customers and restaurants with hidden price hikes and surprise fees.
Re: second step
The second step is the “enhanced amenity fee” at some shopping areas, such as One Daytona. I understand that there is some small print on the doors to warn the marks, but the chances of the marks actually seeing it seem small.
Everything you buy there is supposed to cost an extra 1%, which goes to the owners of the complex. Just in case the tens of millions in tax subsidies were not enough.
Grubhub lacks high paying brib.. I mean lobbyists.
Hidden price hikes v. underestimated costs
I share the OP’s desire for truth-in-advertising for prices, so dismally absent in the USA. Europeans correctly build “value added tax” into advertised prices, while the US custom of adding “sales tax” to the advertised price became a first step for scammers.
The DC AG’s lawsuit is a step (one in thousands needed) in the right direction.
Nevertheless, during the pandemic, there seemed to be widespread unrealistic expectations about the cost of home delivery, that it should cost the restaurant customer nothing. Really? But I suppose outfits like Grubhub may have been at the bottom of it, planning to make profits from both customers and restaurants with hidden price hikes and surprise fees.
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