Pennsylvania Attorney General Josh Shapiro announced a settlement with online food delivery marketplace, Grubhub. The Office of Attorney General’s investigation and subsequent settlement was focused on the pricing and disclosures to consumers as provided on Grubhub’s platform which uncovered that consumers were sometimes charged higher prices for the items they ordered than they would be if they ordered from the restaurant directly. As part of this agreement, Grubhub will provide a total of $125,000 in donations to a number of food banks throughout Pennsylvania.
“Online food delivery platforms can be very convenient, but consumers deserve transparency so they can make informed decisions about whether to place an order. I’m pleased that Grubhub agreed to make their pricing more straightforward,” said Attorney General Shapiro. “This is another step towards delivering a marketplace that is more fair for restaurants and consumers — and I call on all food-delivery platform companies to provide this same transparency as soon as possible.”
Grubhub is adding in additional disclosures on their app and website that the prices on the platform may be higher than in the restaurant. These price disclosures will be added by Grubhub to their menu pages and the check our page for visibility.
Further investigation into Grubhub’s platform also discovered that Grubhub has been using routing numbers, microsites – separate websites that house the restaurant’s menu – and undisclosed partnerships with third-party websites such as Yelp or menupages.com. This misrepresentation concealed Grubhub’s true role in publishing restaurant information and in turn undermined consumers’ ability to shop around or compare prices. A consumer calling a Grubhub routing phone number may want to order from a restaurant directly and may have believed that they were calling the restaurant directly, but instead the consumer would reach a Grubhub customer service representative, and may have paid higher prices along with Grubhub’s additional fees.
In addition, Attorney General Josh Shapiro wants consumers to be aware that:
- Items are often more expensive in the app – When you place an order for groceries or order food from a restaurant through a delivery app, the price you are charged for each item may be higher than it would be if you bought the item in the store or restaurant. The higher item prices are charged in addition to the delivery app fees, discussed below.
- Fees are charged by delivery apps – Consumers should be aware of fees and charges related to any orders made on a delivery app, in addition to any applicable taxes. Fees will generally always include service fees, delivery charges, and any tip that the consumer allocates for the delivery driver. Other fees that may be charged include: a “heavy” fee if the order includes heavy items, a “small order” fee for orders below a minimum subtotal, and “surge” fees when there is high customer demand. Consumers can find more information by checking the terms and conditions of the platform’s service.
- Restaurants pay commissions to the delivery apps – Restaurants may pay a percentage of each order in commission to the delivery apps, in addition to the fees that customers pay to the delivery apps. Consumers who want all of their payment to be paid to the restaurant can order and pick up directly from the restaurant.
Grubhub’s $125,000 payment will be distributed in equal amounts to the following pre-screened non-profit entities: Feeding Pennsylvania, the Central Pennsylvania Food Bank, the Greater Pittsburgh Community Food Bank, and Philabundance.