Chicago Sues DoorDash and Grubhub for Deceptive and Unfair Business Practices
Services like DoorDash and Grubhub have undeniably made ordering delivery easier for customers, but whether they actually benefit restaurants has been a source of extensive debate. And now, once again, a major city is taking legal action against these companies, alleging their practices are unfairly taking advantage of the restaurant industry.
On Friday, the city of Chicago announced that they had filed consumer protection lawsuits against both DoorDash and Grubhub for engaging in deceptive and unfair business practices with both customers and restaurants. The legal action comes after an investigation by the city's Department of Business Affairs and Consumer Protection (BACP) and its Law Department.
Specifically, the city alleges that both delivery services post "unaffiliated restaurants without their consent, leaving restaurants to repair reputational damage;" use "bait-and-switch" tactics with consumers on delivery fees; and "hide that menu prices on their platforms are often significantly higher than the prices available if ordering directly from the restaurant."
Additionally, the city had specific allegations for each company individually. For Grubhub (which, as an added wrinkle, is headquartered in Chicago), the city stated that the company launched "deceptive, promotional campaigns to 'save restaurants' during the pandemic" and broke the city's 15 percent emergency cap on commissions, while also reiterating two allegations Grubhub has previously faced elsewhere: deceptively routing restaurant phone calls through its own phone numbers and creating its own websites for restaurants. As for DoorDash, the city alleges that the company misled consumers about how tips were used and also misled consumers with their "Chicago Fee" by implying the fee was set by the city.
"As we stared down a global pandemic that shuttered businesses and drove people indoors, the defendants' meal delivery service apps became a primary way for people to feed themselves and their families, as well as support local restaurants," Chicago Mayor Lori E. Lightfoot said in the announcement. "It is deeply concerning and unfortunate that these companies broke the law during these incredibly difficult times, using unfair and deceptive tactics to take advantage of restaurants and consumers who were struggling to stay afloat."
Chicago's Acting BACP Commissioner Kenneth Meyer also chimed in. "We discovered that Grubhub and DoorDash have been engaging in deceptive and misleading business practices that harm consumers and exploit restaurants. These practices continued unabated during the pandemic when restaurants were struggling to survive," he added. "We heard from the hospitality industry and Chicago's consumers about these unfair practices and this action demonstrates we will hold non-complying businesses accountable."
Reached for comment, both Grubhub and Doordash denied all of the allegations against them.
"We are deeply disappointed by Mayor Lightfoot's decision to file this baseless lawsuit," a Grubhub spokesperson told me. "Every single allegation is categorically wrong and we will aggressively defend our business practices. We look forward to responding in court and are confident we will prevail." In regard to specific claims against them, Grubhub largely stated that either their actions are not in violation of the law or have been discontinued.
Meanwhile, DoorDash told me, "This lawsuit is baseless. It is a waste of taxpayer resources, and Chicagoans should be outraged. DoorDash 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. This lawsuit will cost taxpayers and deliver nothing." The company also directed me towards an official blog post further explaining their position.
Chicago's Mayor's Office stated that the lawsuits "seek injunctive relief in the form of greater transparency and other key conduct modifications, restitution for restaurants and consumers hurt by these predatory tactics, and civil penalties for violations of the law."
Additionally, Eater Chicago reports that, though not included in the current lawsuits, Uber Eats or other services could still face legal action of their own as Chicago is apparently not yet done with their investigation.