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The Courts

DC Sues Grubhub, Claiming App Is Full of Hidden Fees and High Prices (theverge.com) 120

An anonymous reader quotes a report from The Verge: District of Columbia Attorney General Karl Racine is suing Grubhub for deceptive business practices, saying its food delivery app covertly inflates prices for diners who order through it. The suit demands an end to a laundry list of allegedly illegal practices as well as financial restitution and civil penalties. The newly filed lawsuit (PDF) argues that Grubhub's promises of "free" online orders -- and "unlimited free delivery" for Grubhub Plus -- are misleading. While customers can make pickup orders for free, the company charges delivery and service fees for standard orders and service fees for Grubhub Plus orders, displaying the service fee until recently as part of a single line with sales taxes. "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 Racine in a statement. "Grubhub charged hidden fees and used bait-and-switch advertising tactics -- which are illegal."

The complaint says Grubhub orders often cost more than ordering the same item at a restaurant and argues that the company fails to reasonably disclose this to consumers. "Because Grubhub already charges consumers several different types of fees for its services ... consumers expect that the menu prices listed on Grubhub are the same prices offered at the restaurant or on the restaurant's website," it says. Grubhub has also listed many restaurants without their permission to expand its service, routing orders through its services and taking a commission. The complaint says it listed "over a thousand" restaurants in DC that had no connection with the company, asserting that the unapproved listings often contained menu errors and resulted in orders that would "take longer to fill, would be filled incorrectly, would be delivered cold, or would eventually be cancelled altogether."

Grubhub -- which also operates Seamless and several other food delivery apps -- has made more elaborate attempts to insert itself into restaurant transactions as well. The lawsuit notes its launch of unsanctioned microsites that appear to be official restaurant sites, as well as custom phone numbers that let it charge fees when customers call restaurants, even when the calls didn't result in orders. The company also offered a "Supper for Support" promotion that required restaurants to foot the bill for a special discount; it offered restaurants $250 in compensation after a backlash.
"During the past year, we've sought to engage in a constructive dialogue with the DC attorney general's office to help them understand our business and to see if there were any areas for improvement," said Katie Norris, director of corporate communications, in a statement. "We are disappointed they have moved forward with this lawsuit because our practices have always complied with DC law, and in any event, 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."

According to The Verge, Grubhub "says the app no longer lists restaurants that haven't agreed to work with it, and it's retired its microsites and the Supper for Support program." It will also make it more clear to users that prices might be lower when ordering directly from the restaurant, "and it will specify in marketing that only pickup orders are free," adds The Verge. The company maintains that it "has not misrepresented its fees," however.
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DC Sues Grubhub, Claiming App Is Full of Hidden Fees and High Prices

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  • by Merk42 ( 1906718 ) on Tuesday March 22, 2022 @08:09AM (#62379755)
    Is Harvey Dent the DA?
  • by schwit1 ( 797399 ) on Tuesday March 22, 2022 @08:14AM (#62379773)

    The displayed price of gas includes tax.

    Why can't ...
    The only labeled price for a box of Cheerios include tax
    The only labeled price for a car includes all taxes and fees
    The only advertised price for Verizon wireless includes all taxes and fees

    If they can do it for gas why can't they do it for everything?

    • by splutty ( 43475 )

      Live anywhere but the US and you won't have this issue.

      • Jamaica also doesn't include the sales tax of goods on the listed price.

        • Ditto, Canada
          • Ditto, Canada

            But Canada kinda copies the US in some of it decision making. Still trying to ween off the archaic US Imperial system.

            I'd like priced to include taxes, and optionally include non-taxed price underneath. As for online, it would be good for sites to ask what jurisdiction you are living so as to adjust prices, if there are taxes that will be added at the end of the process.

            • It's a explicit decision by Canadian authorities to make the tax bite highly visible. It's been officially debated several times. The problem with tax-in prices is that the taxes are hidden so there's no political cost to raising rates again and again.

              • It's a explicit decision by Canadian authorities to make the tax bite highly visible. It's been officially debated several times. The problem with tax-in prices is that the taxes are hidden so there's no political cost to raising rates again and again.

                Not that that will ever stop them.

        • Oh no, not Jamaica!

    • by bws111 ( 1216812 )

      Because there are thousands of taxing jurisdictions, which means thousands of (potentially) different prices. Easy to deal with when you only sell 3 or 4 products and the only price advertising is extremely local (a large sign out on the road). Much harder (and more expensive) when you're selling hundreds of products with the same 'price' (except for tax) all over the country. Besides, who wants the tax to be hidden?

      • by Luckyo ( 1726890 )

        I agree with you with difficulty of having thousands of taxing jurisdictions, but tax doesn't go hidden when it's included. For example, here in Finland all price tags include all applicable taxes. And your receipt will have a breakdown of taxes included in the sale, such as VAT for consumer goods.

        So your receipt has price per item, which is tallied at the end and under it is the amount you paid to the seller, and the amount of tax that seller collected for the government. This is possible because there's o

        • by bws111 ( 1216812 )

          The example given was gas, and here (US) the tax is hidden. All you see is the 'price per gallon (including tax)'. There is no breakdown of what goes into that price.

          • by Luckyo ( 1726890 )

            Interesting. I just picked up my recent receipt from Lidl to check, and it has specific tax breakdown with multiple VAT levels. This receipt is for a total of 22,20 EUR, and it has category A VAT of 24% paid from 40 cents where net payment is 0.32 and tax is 0.08 and category B VAT of 14% where tax is paid from 21,78 where net payment is 19,11 and tax is 2,67.

            It literally just takes three additional rows on the receipt to show this detailed breakdown.

          • by Rhipf ( 525263 )

            Are you sure that the taxes aren't listed on the pump? I haven't bothered to check recently but know in the past I have seen a sticker on the pump that breaks down how the final price was derived (i.e. it had all the various taxes for a litre of gas listed). Admittedly I am in Canada so maybe the US doesn't do this but I would be a bit surprised if there isn't a breakdown of the taxes on your receipt at the very least.

            • by bws111 ( 1216812 )

              Yes, I am quite sure the tax is not listed on the pump. There USED to be a sticker on the pump saying what the tax was, but then they changed the tax from just a fixed amount per gallon to a fix amount PLUS a percentage, and lo and behold the stickers disappeared.

      • Funny, in the EU where up-front final pricing is legally required & products must be fit for purpose out of the box, e.g. batteries included, the sky hasn't fallen in as a result. Honest & up-front pricing doesn't appear to be an insurmountable problem. What's your next excuse for abusive sales practices?
        • by bws111 ( 1216812 )

          Instead of just providing smug responses, how is it done? Do you only have a single tax rate? Do stores not advertise prices?

        • by hawk ( 1151 )

          what an amazingly idiotic system--*most* of my cordless tools, for example, are sold without batteries, which are roughly as expensive as the tools. I have enough batteries to get through the day already; more would be wasteful.

          And even for something small, the throw-away batteries are simply more toxic landfill for someone whose use pattern c alls for either alkaline or rechargeables.

          And advertising a final price could be difficult--I'm in unincorporated county, with two municipalities within two miles aw

          • So you're saying your excuse is the USA is backward? Can't do a little math before the customer arrives at the checkout?
            • by hawk ( 1151 )

              No, if you read it, I'm saying that it isn't possible to have a general advertisement due to differing tax rates in clusters of jurisdictions.

              Posting prices with tax is a trivial issue (a SMoP)--but unless both prices were there, the price wouldn't match the ad.

              (as well as the rules requiring batteries being both environmentally and economically wasteful.)

              • Devices that use disposable batteries are the problem, not that laws require vendors to supply goods that are functional.

                Re: "it isn't possible to have a general advertisement due to differing tax rates in clusters of jurisdictions." Why?
                • by hawk ( 1151 )

                  >Devices that use disposable batteries are the problem,
                  >not that laws require vendors to supply goods that are functional.

                  aside from there being use cases where a couple of disposable batteries over many years consumes less resources than a rechargeable, I note my collection of 18v power tools, all using the same battery packs.

                  and the problem with a paper or (non-targeted) electronic add with multiple jurisdictions is the listing of several prices, with readers needing to sort through a list for their

      • Having thousands of tax jurisdictions is part of the problem that should be resolved. If Safeway were forced to send out ad flyers that said Avocados were 4 for 3.98 in the following cities, and 4 for 4.23 in these cities and 4.17 if you go the store in city X that's outside of the transit district - then surely they'd wind up being a force for simplifying sales tax rules and lobby state governments to have better uniformity.
        • And in Arizona, just an example, cities etc. are permitted to set local privilege taxes. So yeah, go ahead and lobby for taking that away.

          Oh, and in the city next to where I live, renting a car for local use incurs a 'resort tax', intended to gouge visitors, but I live several miles away from any facility that inspires such a tax. It's like having the airport concession tax without an airport.

        • by bws111 ( 1216812 )

          Well it won't be resolved, so no point in discussing it. States have the right to set their own tax structures.

      • by Rhipf ( 525263 )

        Besides, who wants the tax to be hidden?

        Who says that the taxes have to be hidden? It really isn't that hard to state the final price and yet still list the taxes on the receipt. You could even add small print with the taxes spelled out if you want the customer to know the taxes before purchasing.

        • by bws111 ( 1216812 )

          The example given was gas prices. The only price available for gas is 'per gallon (tax included)'. What that actual tax is is not listed anywhere. It is hidden.

    • The displayed price for gas is an interesting example of another bit of marketing trickery, though, since it invariably includes 9/10ths of a cent after the three digit price and we rarely ever think about it when stating the price of the gas.

      Regarding hidden (or rather not completely transparent) pricing above in-restaurant dining charges for the extra courtesy of delivery, I don't believe that is actually a huge surprise for most people. For the delivery service to be profitable, they charge the restauran

      • by Luckyo ( 1726890 )

        Unless your time is pretty expensive, most people will save money by buying from restaurant directly. You're paying a decent chunk of money for convenience on delivery platforms.

        This argument comes off a bit "let them eat cake/buy tesla"-y, through I don't think that's how you meant it.

        • For me, the added cost of delivery is justified when we're at home knocking back a few cervezas, hanging out watching a movie or a game when no one is in the mood to play cook or dishwasher. YMMV.

          Not having to cook and clean when in good company? Worth a few dollars more.

          Not having to engage in a roadside interview with law enforcement with bated breath? Priceless.

          • by Luckyo ( 1726890 )

            That last one escalated quickly. You may as well add "not having to get kidnapped on the way to the restaurant".

      • by Rhipf ( 525263 )

        Regarding hidden (or rather not completely transparent) pricing above in-restaurant dining charges for the extra courtesy of delivery, I don't believe that is actually a huge surprise for most people. For the delivery service to be profitable, they charge the restaurant a percentage of the order for generating a sale the restaurant might not otherwise have made. The restaurant either passes these price increases along to the customer or likely becomes unprofitable themselves.

        Maybe it should actually be the other way around. Delivery services like Grubhub should purchase the food from the restaurant for the listed price and then charge the person ordering the food to be delivered by them for the delivery. If they can't make a profit on that business model then that is their fault. Using that business model their practice of listing restaurants that aren't actually signed up with their service* becomes less of an issue as well. If Grubhub doesn't have an agreement with a restaura

      • It is a major problem for restaurants that don't have large IT budgets - Grubhub powers its way to the top of the search results and shows the menu for the restaurant that it wants to show. In some instances the restaurant doesn't even have a formal relationship with Grubhub. Then Grubhub shows a "menu" of items that it wants you to buy through them which is at inflated prices and often only a partial menu for what the restaurant actually offers. Grubhub also tries to make it seem like you are on The Restau
      • by hawk ( 1151 )

        > since it invariably includes 9/10ths of a cent

        back when it was under a quarter, 4/10 was also a common suffix.

        (I think places like Route 66 should be posting gas prices with the last actual penny lifted like the .9, just to get the two digit historic look, but . . .)

    • Only in the USA, everywhere else the price displayed is what you pay

      • by bws111 ( 1216812 )

        'Everywhere else'? So you know how things are priced everywhere in the world? Impressive. Of course, just a few posts above are people saying that Jamaica and Canada also don't include sales tax in the listed price, so I guess your knowledge isn't as impressive as you like to think.

    • So that municipalities can compete for customers with lower sales tax.

    • Well taxes are weird in the US.
      Being that the US doesn't have a VAT (Value Add Tax) which you pay a tax for every transaction, if you were to incorporate it into your business to create additional profit which then would be taxed based off the final product, vs all the parts. The means some people will pay sales taxes and the extra fees, while others will not. So having the price separated from the taxes for most items makes sense.

      Gas you buy you will just burn it anyways, so it isn't a direct part of t

      • " however if a business gets them, then they don't always need to pay taxes on it."

        Commonly called 'resale' in the US. If you're acquiring it to resell it, you will usually not pay a tax. Good examples, buying SSDs to repair customer laptops, no tax on the shop, they pay tax on the part when the customer pays.

        And food is generally not taxed in the US. In fact, often labor charges are not either, though it became fashionable a while ago to tax 'professional services', as if they were products. It's never abo

        • by bws111 ( 1216812 )

          Unprepared food is not taxed, prepared food is.

          • From Arizona's Deportment of Revenue Publication 575, "Tax Exempt Food":

            Food items intended for human consumption generally are exempt from the state’s transaction privilege tax. However, food items must fall within the Department of Revenue’s guidelines to be tax exempt. These guidelines are compatible with the Food Stamp Act of 1977. Pursuant to Arizona statute, tax exempt foods are generally those items of food intended for home consumption which, if purchased from an eligible grocery busines

          • by hawk ( 1151 )

            >Unprepared food is not taxed, prepared food is.

            that varies by state.

            In some, it also matters whether the food is hot or cold, whether or not consumed on premises, whether or not it is carbonated, and who knows how many more.

            hawk

      • The progressive part of the tax system in America is the good part. It isn't the problem. It's the other stuff around it that's designed for one thing to obfuscate, and for another thing to be accessible to the rich. For all the talk about the poor figuring out that they can vote themselves benefits, it's actually the wealthy who lobby for benefits, because they can afford it and money is the only vote that really matters.

        One example of that is that Social Security contributions are capped, and what's more,

    • Cheerios aren't taxed....
    • The displayed price of gas includes tax.

      Why can't ... The only labeled price for a box of Cheerios include tax The only labeled price for a car includes all taxes and fees The only advertised price for Verizon wireless includes all taxes and fees

      If they can do it for gas why can't they do it for everything?

      You want that?? Not me. I want to know how much those rapacious robber barons are adding in taxes.

    • Many places in the united states have laws that explicitly prohibit advertising prices with tax included for most types of goods. I can't tell you WHY such laws are on the books, but if it is illegal to advertise the actual price, then I can't fault a company for not doing so.
    • by DarkOx ( 621550 )

      if anything there ought to be rule requiring displaying either both the price before and with tax included or never including tax. People should feel taxes, so they understand just how much the government is purloining. That would enable them to make rational decisions at the ballot box. Maybe some folks will feel they are getting their monies worth; but I bet most will decided government is to big.

      Same thing with income taxes; withholding should be done away with; Everyone should just be required to PAY

      • by bws111 ( 1216812 )

        In fact this is the rule in many places - prices DO NOT include tax (with exceptions for things like gas). For example, NYC has the following law:

        20-708. Display of Total Selling Price by Tag or Sign.
        All consumer commodities, sold, exposed for sale or offered for sale at retail except those items
        subject to Section 20-708.1 of this code, shall have conspicuously displayed, at the point of
        exposure or offering for sale, the total selling price exclusive of tax

        • by slazzy ( 864185 )
          Personally I like the way it works in New Zealand, prices include all taxes, but they are shown on the receipt.
      • Everyone is required to pay quarterly in the US already. Most people cover this through monthly tax withholdings from their employer. But if you are self-employed or have other significant income outside of an employer that withholds taxes, you are required to make quarterly payments. If you don't make sufficient quarterly payments you can pay penalties and interest.
        • by DarkOx ( 621550 )

          Exactly. Employeer withholding should be done away with. Everyone should be forced to cut a check, go enter their CC / Debit numbers online, etc and make the payment themselves.

          Most people with w2 income never handle the money they pay in income taxes. That is not right. They should feel the pain of parting with it.

      • by j-beda ( 85386 )

        People should feel taxes, so they understand just how much the government is purloining.

        I think this has some merit, but the opposite idea does too - it is a bad idea to actively decrease people's feeling of being part of a functioning society. Constantly picking at every little time when being part of that society actually costs the individual something works against feelings of inclusion. We already suffer from tremendous lack of information about the benefits we obtain from a well functioning society - h

    • The rest of the world does this with tax. Usually with VAT rather than sales tax, but that difference is irrelevant. That doesn't help with extra fees, of course, as the company can argue that the fees cover separate services.

      The thing is: GrubHub&co are in a market where they cannot legitimately make a profit. They can just about break even, if they run "dark kitchens" (but you really don't want to eat that food). Otherwise, they have to screw both customer and restaurant.

      It's just not a sustainab

  • The DC AG is far more interested in tilting at corporate windmills than in actually enforcing laws that really affect people. Coincidentally (or not?), he just got slapped down by the courts over his antitrust suit against Amazon.
  • Anyone who thought the prices listed in 3rd party food delivery apps are the same as the ones at the restaurant are naive. Plain and simple.

    You only get the restaurant's price when you use the restaurant's own employee delivery drivers.

    This is targeted political grandstanding for votes in an election year.
    • A lot of what is alleged in the summary is simple false advertising. I am all for forcing businesses to state bottom-line pricing upfront, because given the option, they don't.
    • Considering how restaurants are unhappy with all the aggressive shenanigans by the delivery firms, I don't think I'd want to eat food delivered by one.

    • by fermion ( 181285 )
      Sometimes it is first party. Panera Bread has different prices for third party delivery on their app. They disclose in small print, but it is not something one would expect
    • You're blaming this on the consumer when Grubhub (and others) try very hard to win the top menu Google search results and then try to make their page appear like it's the restaurant's site?
  • That Americans think this kind of abuse of restaurants & diners is not only acceptable but actually try to justify & defend it. Where's your dignity?
  • After all they denied you the option top go sit at the restaurant and enjoy that meal. You get funneled into the delivery scams. Now they figure out that Grubhub (and lest we forget, Yelp as another of several largely fraudulent business models) was taking advantage of that and cheating customers AND restaurants, all indignant and champions for the poor consumer they targeted for social distancing, quarantine, and many forced out of work.

    Looking worse as time goes on.

  • by waspleg ( 316038 ) on Tuesday March 22, 2022 @10:05AM (#62380095) Journal

    Saying this as someone who has had paid membership to both and "VIP" status on DD before deleting my account over their bullshit shenanigans.

    Grubhub does everything accused of, but generally, at least in my area, they've had better drivers and less issues overall. The fees are lies though, even with a premium account you pay at least a 10% service fee on top of tip/tax, and the menu prices are very obviously inflated (they have odd numbers, so likely by a percentage).

    Still, I can't drive, and delivery makes weekdays/nights easier.

  • If you're too lazy to go get your sub/pizza/lasagna/whatever, you should be nickel and dimed to death by a delivery company. They're the ones footing the bill for the cost of delivery, including the safety of their drivers.

    That said, if Grubhub lists every single "fee" when you place an order, then there shouldn't be an issue. And yes, I know what the article says. Grubhub is hiding those "fees" so yes, make them transparent. If a grocery store can produce a list of everything you ordered, including disco

    • Yo jackass. The delivery firm is not bearing the cost. They charge the restaurant and they charge the customer. You can fuck off now.
      • by Pascoea ( 968200 )

        Yo jackass.

        Great way to start an intelligent conversation.

        The delivery firm is not bearing the cost. They charge the restaurant and they charge the customer.

        Who pays the driver? It isn't me, and it sure isn't McDonalds. The COST of the delivery, the money payed to the driver and GrubHub overhead, is absolutely borne by GrubHub. They (Grubhub) also dictate the PRICE that is payed by McDonalds, and ultimately you, for the delivery service. If you're going to be pedantic you could at least be accurate.

        You can fuck off now.

        You kiss your mother with that mouth?

    • by cstacy ( 534252 )

      Stop being a typical lazy American and go get your own damn food.

      I would love nothing more, but my blindness and other handicaps make it impossible to travel to restaurants. Delivery is cheaper than a taxi (or Uber). Sorry I'm too fucking "lazy" for you. I suppose I am also too old, and ought to be terminated anyway. That would seem to satisfy your hateful opinion of people like me.

  • None of the business practices the DC ag is alleging are good, but they can all be corrected if they are occurring. The problem I don't see how grubhub and similar business can solve is trademark dilution by tarnishment. The problem for restaurants whose food is being resold without permission is that a significant portion of customers blame the restaurant for issues caused by the reselling service, rather than the reseller. No amount of disclaimers or disclosure is going to change this behavior, and it
  • So... $15 per hour living wage but we should only pay $10 for food that someone spent an hour round trip to deliver to us? What is the reasonable expectation?
  • Seriously - just don't use these services. They haven't been around that long, so you didn't need them before. Delivery has been around forever for markets where it makes sense. They mostly had that figured out. Semi-parasitic services like these are damaging to their hosts.

    Just say no.

    • "GrubHub are bad m'kay? Don't use GrubHub." - Let's see how well that works out while they strip their employees, restaurants & their customers of all their dignity.
  • Restaurant owner told me he had to raise prices for everybody to pay his end of the fees that GrubHub & Co charge. Apparently Covid changed his business so that 50+% of his business was via delivery services, so he couldn't just eat their fees anymore.

  • Let's be honest, most restaurant owners are so technically inept they can barely manage to put a PDF of their menu online, let alone set up a delivery service. If they don't want to work with these delivery companies then nobody's forcing them, but I see it as a win-win for everyone involved. They take a cut and in turn give you more exposure, more orders, more profit. Write your own software if you don't want to use theirs, and you'll see how difficult and expensive it is.

You will have many recoverable tape errors.

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