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Grubhub, DoorDash Hit with Lawsuit Over Misleading Enterprise Practices – Authorized Reader

The city of Chicago is suing Grubhub and DoorDash over alleged deceptive business practices.


In Chicago, DoorDash and Grubhub are coming under fire by city officials alleging the delivery companies are “harming the city’s restaurants and their customers by charging high fees and through other deceptive practices when delivery and takeout business became essential to the industry during the COVID-19 pandemic.

Delivery driver graphic
Delivery driver graphic; image courtesy of mohamed_hassan via Pixabay, www.pixabay.com

When commenting on the situation, Mayor Lori Lightfoot said:

“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.”

So far, the two companies have pushed back against the allegations and called the claims baseless. It’s important to note that this isn’t the first time delivery companies like Grubhub and DoorDash have come under fire. However, previous efforts “targeted specific policies compared to Chicago’s attack on numerous elements of the companies’ operations.

In the past, the district attorney of San Francisco “accused delivery companies of violating California law by classifying drivers as contractors.” Back in 2019, Washington D.C. settled with DoorDash in 2019 after alleging the company misled customers about how much drivers received in tips.” Most recently the Massachusetts attorney general’s office filed a lawsuit in July against Grubhub, accusing the company of “charging restaurants illegally high fees during the pandemic.”

According to the recent Chicago lawsuits, DoorDash and Grubhub “advertise delivery services for restaurants without their agreement, hurting the businesses’ reputation when customers are unhappy about the cost or service.” On top of that, city investigators “found that both companies charge higher prices for items than restaurants set on their own menus and charge more in total fees than initially disclosed to customers,” the suit notes.

Taylor Bennett, a spokesman for DoorDash, responded to the allegations by saying:

“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.”

Grant Klinzman, a spokesman for Grubhub, chimed in and said:

“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.”

At the moment, the suits haven’t specified what type of damages they’re seeking. Though, the city is “asking for a fine for each violation of the city’s code and an order that would stop them from violating it.”

Sources:

Chicago: DoorDash, Grubhub mislead restaurants, customers

Chicago sues DoorDash, Grubhub over deceptive business practices

 

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