Complaint for Permanent Injunction — FTC and Illinois v. Grubhub Inc. (N.D. Ill., ECF 1, filed 12/17/24)
Summary
A complaint for permanent injunction, monetary judgment, civil penalty judgment and other relief, filed December 17, 2024 by the Federal Trade Commission and the People of the State of Illinois against Grubhub Inc. and Grubhub Holdings Inc. in the U.S. District Court for the Northern District of Illinois, Case 1:24-cv-12923, Document 1. The complaint alleges that Grubhub added undisclosed fees at checkout, used deceptive enrollment and cancellation tactics for its Grubhub+ subscription, and blocked diners' accounts and gift card funds. It alleges that more than 320,000 of approximately 610,000 restaurants on the platform were at one point listed without authorization, and that drivers were told of earnings such as $26 per hour while the median driver earned $11 per hour in 2023. The 66-page complaint asks for injunctive relief, monetary relief and Illinois civil penalties.
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“Complaint for Permanent Injunction — FTC and Illinois v. Grubhub Inc. (N.D. Ill., ECF 1, filed 12/17/24).”
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Case: 1:24-cv-12923 Document #: 1 Filed: 12/17/24 Page 1 of 66 PageID #:1
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
FEDERAL TRADE COMMISSION and Case No. ____________
PEOPLE OF THE STATE OF ILLINOIS, COMPLAINT FOR PERMANENT
INJUNCTION, MONETARY
Plaintiffs, JUDGMENT, CIVIL PENALTY
JUDGMENT, AND OTHER
v. RELIEF
GRUBHUB INC., a corporation, and
GRUBHUB HOLDINGS INC., a corporation,
Defendants.
COMPLAINT
Plaintiffs the Federal Trade Commission (“FTC” or “Commission”), and the People of
the State of Illinois, by Kwame Raoul, Illinois Attorney General, for their Complaint allege:
1. The FTC brings this action for Defendants Grubhub Inc. and Grubhub Holdings
Inc.’s violations of Section 5(a) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §
45(a); the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8401 et seq.; the
FTC’s Trade Regulation Rule entitled “Impersonation of Government and Businesses”
(“Impersonation Rule”), 16 C.F.R. pt. 461; and for Defendants’ participation in acts and
practices that the Commission has previously determined to be unfair and deceptive, in
connection with their sale of food ordering and delivery services. For these violations, the FTC
seeks relief, including permanent injunctive relief and monetary relief, pursuant to Sections 13(b)
and 19 of the FTC Act, 15 U.S.C. §§ 45(a), 53(b), and 57b; and ROSCA, 15 U.S.C. § 8404.
2. Plaintiff People of the State of Illinois, as part of the same case or controversy,
also brings this action for Defendants’ violations of the Illinois Consumer Fraud and Deceptive
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Business Practices Act, 815 ILCS 505 (“Consumer Fraud Act”), and the Illinois Uniform
Deceptive Trade Practices Act, 815 ILCS 510. The Attorney General of the State of Illinois
brings this action under Section 7 of the Illinois Consumer Fraud and Deceptive Business
Practices Act (815 ILCS 505/7) to obtain a permanent injunction, restitution, and civil penalties
against Defendants.
SUMMARY OF THE CASE
3. Grubhub Inc. and Grubhub Holdings Inc. (together, “Grubhub”) operate
Defendants’ online food ordering and delivery service. Grubhub allows diners to browse
thousands of restaurant offerings and order food for delivery or pickup from those restaurants by
using a single, consolidated platform. Grubhub’s platform includes the food ordering and
delivery system under the Seamless brand, which Grubhub acquired through a merger in 2013—
one of multiple acquisitions that have contributed to its growth.
4. Grubhub has grown enormously over the last decade, becoming one of the largest
online ordering and delivery services in the country. It operates in over 2,400 U.S. cities, with
more than 500,000 restaurants on its platform, and over 200,000 delivery drivers. Each year,
approximately 31 million active diners place 262 million orders through Grubhub.
5. As a digital platform, Grubhub had to achieve a critical mass of customers in
order to gain scale. The more restaurants it signed up, the more diners would be likely to use
Grubhub—and more diners, in turn, would draw more restaurants. More business meant more
reviews, more data, and other benefits that would turbocharge Grubhub’s momentum and allow
it to experience accelerated growth.
6. Faced with these incentives, Grubhub resorted to dishonesty and underhanded
tactics in its quest to gain scale. It has consistently misled and mistreated the market participants
it relies on to do business: the diners that place food orders through Grubhub’s platform, the
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restaurants whose offerings Grubhub markets and delivers, and the drivers who deliver the orders
made through Grubhub.
7. Grubhub harms diners by deceiving them about how much its services cost,
promising one price but charging more through hidden fees. A former Grubhub executive has
even described these tactics as “pricing shell games.” Grubhub first baits diners with a single,
low-cost (or no-cost) delivery charge on its landing, browse, search, and ordering pages. Enticed
by this low fee, diners proceed to search for restaurants, make a selection, and populate their
bags with menu items. At each step in the process, Grubhub continues to present diners with that
same low-cost fee, leading diners to believe that this fee represents the total cost of Grubhub’s
services. Once diners reach the checkout screen, though, Grubhub then saddles them with
additional undisclosed fees for the same services. These hidden fees are hefty, often doubling the
advertised cost of delivery. Grubhub’s tactics draw in diners who might have been put off by the
actual, and much higher, cost of using Grubhub’s services. Grubhub’s misleading promises
generate hundreds of millions of dollars in annual revenue for the company. In a single year,
Grubhub pocketed close to half a billion dollars through just one of these hidden fees.
8. Grubhub also uses deceptive enrollment and cancellation tactics to lock diners
into Grubhub+, its monthly subscription service. Grubhub touts that subscribers will enjoy “free
delivery” or “$0 delivery”—that is, they will not pay Grubhub a charge for food delivery. That,
however, is false: Grubhub+ subscribers are subject to many of the same undisclosed fees that
non-subscribers must pay. Once diners join through the easy enrollment process, Grubhub traps
them into the subscription by making it difficult to cancel.
9. Grubhub also denies diners’ use of their Grubhub accounts and gift card funds.
Grubhub frequently flags diners with multiple or high gift card balances, cancels the diners’
orders, and blocks them from placing further orders, which prevents them from using their gift
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card balances and other credits. Unlike legitimate efforts to prevent fraud, Grubhub’s tactics
allow it to seize and pocket diners’ money for itself. Grubhub routinely fails to provide diners
with any notification that their accounts are blocked or any means to restore access to their
frozen funds. As a result, Grubhub often permanently denies those diners the use of their
legitimate gift cards, effectively confiscating diners’ money. For years, thousands of consumers
have complained about Grubhub’s undisclosed and irremediable account blocks, which have
remained among the top sources of consumer discontent.
10. With respect to restaurants, Grubhub relies on partnerships to build out its
platform offerings. But it has fueled its dramatic growth by falsifying hundreds of thousands of
its restaurant affiliations, listing restaurants on its platform without their knowledge or consent
(“Unaffiliated Restaurants”). Grubhub has no relationship with these Unaffiliated Restaurants,
but it falsely represents that it is affiliated with them by creating listings for them and accepting
diners’ orders from those restaurants. For Grubhub, these misrepresentations are a quick and
cheap way to add restaurant offerings and build scale. But Grubhub’s deception harms
restaurants and diners alike. Orders from these restaurants regularly result in higher charges to
diners, delivery delays, cancellations, order inaccuracies, and other problems, for which diners—
unaware that the restaurants are unaffiliated with Grubhub—inevitably blame the restaurant
rather than Grubhub.
11. Grubhub executives pursued these fake affiliations as a core part of Grubhub’s
growth strategy, describing it as a “mechanism to gain national scale.” At one point, over half of
all the restaurants on Grubhub’s platform—more than 320,000 of approximately 610,000
restaurants—were Unaffiliated Restaurants listed without authorization.
12. Restaurants that learn they are on Grubhub’s platform without authorization often
demand to be removed, but Grubhub typically stalls and tries to sell them a paid partnership
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instead. Thousands of restaurants have sent legal demands to Grubhub requesting to be removed
from the platform. Often, the only way Grubhub will remove the restaurants is if they threaten
legal action or go to the press.
13. Finally, Grubhub has relied on hundreds of thousands of drivers to accommodate
its growth. But rather than attracting drivers through offering better opportunities, Grubhub has
lured them by misrepresenting their potential earnings. Grubhub has advertised to potential
drivers that they are likely to attain lucrative hourly earnings, such as $26 per hour. In reality, the
vast majority of drivers never earn the advertised amounts. The median Grubhub driver earned
only $11 per hour in 2023, and only the top 2% of drivers actually earn the promised hourly
rates. Grubhub has known for years that its earning claims are not substantiated, but continued
deceiving drivers rather than correcting its claims.
14. Grubhub has long been aware of the harms caused by these problematic diner,
restaurant, and driver-facing practices, which have generated hundreds of thousands of consumer
complaints. Nevertheless, Grubhub has persisted with these practices—choosing to chase scale
through misleading and mistreating consumers rather than through honest competition.
JURISDICTION AND VENUE
15. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a),
1345, and 1355.
16. This Court has supplemental jurisdiction over the State of Illinois’s claims
pursuant to 28 U.S.C. § 1367.
17. Venue is proper in this District under 28 U.S.C. §§ 1391(b)(1), (b)(2), (c)(2), and
(d), 1395(a), and 15 U.S.C. § 53(b).
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PLAINTIFFS
18. The FTC is an independent agency of the United States Government created by
the FTC Act, which authorizes the FTC to commence this district court civil action by its own
attorneys. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a),
which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also
enforces the Restore Online Shoppers’ Confidence Act, 15 U.S.C. § 8401 et seq., which prohibits
a party from charging for certain online transactions unless it has clearly disclosed all material
terms of the transaction; and the Impersonation Rule, 16 C.F.R. pt. 461, which prohibits the
impersonation of government, businesses, and their officials or agents in interstate commerce.
19. The State of Illinois is one of the fifty sovereign states of the United States.
Attorney General Kwame Raoul is the duly elected and qualified Attorney General, acting for
the Plaintiff State of Illinois, and brings this action in his official capacity for and on behalf of
the People of the State of Illinois, pursuant to the Provisions of the Consumer Fraud Act, 815
ILCS 505/7, and his common law authority as Attorney General to represent the People of the
State of Illinois.
20. The Illinois Attorney General believes this action to be in the public interest of the
citizens of the State of Illinois and brings this lawsuit pursuant to Section 7(a) of the Illinois
Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/7(a).
DEFENDANTS
21. Defendant Grubhub Inc. is a Delaware corporation with its principal place of
business at 111 W. Washington Street, Suite 2100, Chicago, Illinois 60602. Grubhub Inc.
transacts or has transacted business in this District and throughout the United States. Grubhub
Inc. is a wholly owned subsidiary of Just Eat Takeaway.com N.V. (“Just Eat Takeaway”), a
Netherlands corporation.
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22. Defendant Grubhub Holdings Inc. is a Delaware corporation with its principal
place of business at 111 W. Washington Street, Suite 2100, Chicago, Illinois 60602. Grubhub
Holdings Inc. transacts or has transacted business in this District and throughout the United
States. Grubhub Holdings Inc. is a wholly owned subsidiary of Defendant Grubhub Inc.
23. Grubhub Inc. and Grubhub Holdings Inc. (together, “Grubhub”) operate
Defendants’ online food ordering and delivery service. At all times relevant to this Complaint,
acting alone or in concert with others, the Grubhub entities have advertised, marketed,
distributed, and sold goods and services to diners and restaurants, and have also advertised and
marketed delivery-driver jobs to potential workers.
COMMON ENTERPRISE
24. Defendants Grubhub Inc. and Grubhub Holdings Inc. have operated as a common
enterprise while engaging in the unlawful acts and practices and other violations of law alleged
below. The Grubhub entities have conducted the business practices described in this Complaint
through a network of interrelated companies that have common ownership, officers, managers,
business functions, employees, and office locations, and that commingled funds. Because the
Grubhub entities have operated as a common enterprise, each of them is liable for the acts and
practices alleged below.
COMMERCE
25. At all times relevant to this Complaint, Defendants have maintained a substantial
course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
15 U.S.C. § 44, and Section 1 of the Illinois Consumer Fraud Act, 815 ILCS 505/1(f).
DEFENDANTS’ BUSINESS ACTIVITIES
26. Grubhub describes itself as the “leading online and mobile food-ordering and
delivery marketplace with the largest and most comprehensive network of restaurant partners.”
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27. Grubhub connects diners and restaurants. Diners across the country search for and
order food from restaurants for pickup and delivery using Grubhub’s desktop and mobile
applications. Restaurants pay to be listed on Grubhub’s platform and for other services, including
food delivery.
28. Under Grubhub’s business model, the company earns revenue both from diners
and restaurants.
29. Grubhub charges fees to diners that are assessed on a per-order basis.
30. Restaurants, for their part, pay commissions of approximately 15-20% per order
to be listed on Grubhub’s platform and to allow Grubhub to process orders on their behalf.
Restaurants that choose to use Grubhub’s optional delivery services pay additional fees of
approximately 10% per order.
31. Grubhub offers delivery services in over 600 geographical areas, including
delivery service areas within the State of Illinois, covering over 2,400 cities and more than 85%
of the United States population. To carry out these services, Grubhub engages over 200,000
delivery drivers around the country.
32. Grubhub classifies its delivery drivers as independent contractors rather than
employees. Grubhub requires drivers to provide their own cars, gas, insurance, and maintenance,
and it pays drivers for each order they accept and complete.
33. Grubhub has engaged in a series of illegal practices directed at diners, restaurants,
and drivers alike.
I. Grubhub Lures Diners by Misrepresenting Delivery Fees
34. Since at least 2019, Grubhub has obscured from diners the true cost of its
services—a tactic that a former executive has conceded is a “pricing shell game.” For years,
Grubhub has advertised that diners will pay a single, low-cost amount for Grubhub’s services in
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connection with a delivery order. In reality, Grubhub tacks on additional undisclosed fees for
those same services—resulting in a final price that is often more than double what it originally
advertised.
A. Grubhub Advertises a Single, Low-Cost Fee for Its Services
35. To entice consumers to order from Grubhub, the company prominently advertises
a single, flat fee in connection with a delivery order. Grubhub’s advertised fee is low, typically
ranging from $0 to $5.99.
36. When diners arrive at Grubhub’s landing page, in some instances, they may see
Grubhub touting that diners can “order online for free”—suggesting that diners will not pay any
fees to use its food-ordering services.
Figure 1.
37. Next, when diners begin searching or browsing for restaurants on Grubhub’s
desktop platform, Grubhub displays a single, low-cost or zero-dollar delivery fee. In the search
and browse view shown below, for instance, diners see the associated fee for delivery orders
from each restaurant, ranging in this scenario from “$0 delivery” to “$2.49 delivery.” The fee for
Palenque Colombian Food, for example, is advertised as “$2.49 delivery.”
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Figure 2.
38. After selecting a restaurant from Grubhub’s browse and search pages, a diner
lands on the specific restaurant’s site, like the one from Palenque shown below. This page
features a digital menu and other restaurant information, like the address, telephone number,
rating, and delivery time.
Figure 3.
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39. Once a diner has decided to order from a particular restaurant, she begins adding
menu items to her “bag.” Clicking the shopping bag icon at the top right of the screen, as shown
in the figure below, reveals the “bag” window that displays all the food items a diner has
selected.
Figure 4.
40. Grubhub’s “bag” window shows the cost of the selected food items in the “Items
subtotal” line, as depicted above. The “Items subtotal” line does not show the advertised fee,
which instead appears towards the top of the bag, in inconspicuous, small, light gray font against
a white background. In the Palenque example, for instance, a diner sees only “$2.49 delivery,”
which is the same fee that was advertised in the search and browse page.
41. When a diner has finished selecting menu items, Grubhub directs her to “Proceed
to Checkout” by clicking the large green button at the bottom of the bag window depicted above.
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Clicking this button reveals the checkout page shown below. The bag window appears at the top
right of the screen and features a bright green button prompting the diner to “Place your delivery
order.”
Figure 5.
42. Many diners proceed to place their order by clicking the green “Place your
delivery order” button, believing that they are charged for the items they ordered, plus the
advertised delivery fee, taxes, and any tip they choose to leave for the driver. Grubhub charges
consumers each of those amounts. But unbeknownst to many consumers and unexpectedly to
others, Grubhub also charges substantial hidden fees that can force diners to pay double or triple
the advertised cost of delivery.
43. Grubhub calls these fees a “service fee” and a “small order fee.” In reality,
consumers do not get anything additional in return for these fees, as Grubhub treats them as part
of the cost of delivery—even though it omits these costs from the advertised “delivery fee.”
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Indeed, the “service fee,” in Grubhub’s words, is “directly tied to the act of delivering (i.e. it is
another form of delivery fee).” And for accounting purposes, Grubhub treats the two fees as part
of the same delivery fee, explaining that “delivery fee + service fee = the restaurant’s delivery
fee.” In an internal discussion about the service fee when Grubhub first introduced it, Grubhub
gave the example that, “a restaurant that normally charges a $4 delivery fee” could “instead have
a $1 delivery fee and a $3 service fee.” Likewise, the “small order fee” is an extra delivery
charge Grubhub adds to the advertised delivery fee for orders under an unstated minimum.
44. For many years, Grubhub charged diners the single advertised delivery fee. In or
around 2019, Grubhub adopted a new ploy to lure in more customers: advertise a lower “delivery
fee” but then move a portion of the delivery fee into a new “service fee” that is tacked on at the
end.
45. Grubhub does not reveal these reshuffled delivery fees to consumers when they
are searching for restaurants or even choosing food items. Instead, the first time in the ordering
process that Grubhub includes any information about these fees is at the end—after consumers
have already spent considerable time and effort searching for a restaurant and selecting items to
order. For example, below the “Place your delivery order” button in the bag window in Figure 5,
Grubhub displays the diner’s selected menu items, as well as the previously advertised $2.49
“delivery fee.” Beneath the delivery fee, however, in small, faint print is the ambiguously labeled
“Other fees.”
46. Grubhub does not describe those “Other fees” on the face of the checkout page
itself. Only consumers who notice and click on a small “i” next to “Other fees” see two hidden
fees, which Grubhub calls a “service fee” and a “small order fee.” Other consumers never notice
the “Other fees” line item at all.
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47. These hidden fees can more than double the original advertised cost of using
Grubhub’s delivery service. For instance, after adding these hidden components of Grubhub’s
delivery fees, the diner in the Palenque example ends up paying $7.49 in fees, not the $2.49 that
Grubhub advertised.
48. At no point before the final check-out screen does Grubhub tell the consumer
about these additional fees or that it will ultimately charge more than the delivery fee it originally
advertised. Nor is there any way for a consumer to avoid these extra charges; Grubhub mandates
them as part of the cost of delivery.
B. Grubhub Is Aware Its Advertised Fee Is Deceptive
49. Top executives directed the efforts in 2019 to hide fees from consumers and grow
the business, and even called Grubhub’s fee structure a “pricing shell game.”
50. As part of that “shell game,” Grubhub artificially lowered its advertised delivery
fee, knowing that this fee is diners’ “pain point”—that is, the cost that is top of mind for diners.
To lure diners and create the false impression of lower delivery fees, Grubhub renamed some of
its “delivery fee” as a new “service fee.” Indeed, when instituting the service fee in 2019,
Grubhub assured restaurants that diners’ delivery costs would remain the same—the delivery fee
would just be split into two. In a 2019 communication, Grubhub told restaurants that it was
testing different ways to present the delivery fee, which would now be “split into both a ‘delivery
fee’ and ‘service fee.’” But it assured restaurants that, “in every case,” the “total fees charged to
the diner will be exactly the same as before.”
51. In addition, Grubhub hid the “service fee” from diners. In 2019, it displayed the
fee early in the ordering process—including on the restaurant menu page and bag view. Grubhub
also displayed the small order fee in the bag view. Soon thereafter, however, Grubhub removed
the service fee and small order fee from those pages. Grubhub also removed other information
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about the fees entirely, such as how they were calculated (for example, that the service fee was
17% of the food order). Grubhub made these changes even though its market research confirmed
that diners preferred “straightforward pricing.”
52. Grubhub knew these “pricing shell game features” were essential to attracting
more diners. Pointing to an Uber Eats advertisement promoting a $0 delivery fee—while hiding
the true cost—a former executive noted that this tactic “is working for [Uber Eats] and others
and we need to figure out how to make this stuff work for us ASAP because we are just leaving
opportunity on the table (literally) while likely losing out on potential new diners that react to
this messaging.” Those diners, in particular, are more inclined to place an order when they see a
lower delivery fee.
53. Grubhub was also well aware that its pricing tactics were deceptive. Indeed, a
former executive acknowledged that the strategies were “misleading, eroding trust,” and “truly
more expensive” for the diner. He recognized that Grubhub could take the “intellectually honest”
course: “conclude that everyone else [using these tactics] is wrong” and “get super aggressive in
the press” to explain that these “pricing tactics” are “like a car company selling a car for FREE,
but charging you the full value of the car for the ‘engine.’” Ultimately, however, the executive
concluded that was a “highly unlikely” path, and his “strong bias” was to continue charging
misleading but lucrative fees.
54. Unsurprisingly, if diners discover that delivery costs more than Grubhub
advertises, they often complain. As one diner and shareholder recounted to Grubhub, the
reshuffled fees make ordering online “laborious,” as it “takes me upwards of 45 minutes” to
place an order. He explained that, “to identify what the delivery fee is, I will typically choose a
restaurant, add a random item to the bag, go to the checkout page to see what the fee is,” all of
which “takes a LOT of time.” This process, the customer explained, “is BEYOND frustrating.”
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55. Grubhub’s deceptive pricing tactics are highly lucrative. The company’s market
research confirms that lower delivery fees draw in diners, because that fee is “most top-of-mind
when thinking about the cost of ordering delivery.” Once locked in, the diners become “oblivious
to service fees,” which are “baked into the product.”
56. As such, around the time Grubhub launched its service fee, a former executive
confirmed that Grubhub found a “significant increase in conversion”—that is, the rate at which
diners complete an order—by reducing the delivery fee and “introducing a service fee for the
remainder.” This, he proclaimed, is a “MASSIVE increase for diner productivity—far larger than
any other [test] we have executed and there is NO change to actual diner fees.”
57. Grubhub has shifted a substantial portion of the cost to use its delivery platform to
its hidden service fee. It is integral to Grubhub’s business and has become the highest-grossing
diner fee. Indeed, in 2022, Grubhub earned $482 million from “service fees” alone—
significantly more than the $293 million it earned in delivery fees.
II. To Lure and Lock Diners Into Its Subscription Program, Grubhub Uses Deceptive
Enrollment Tactics and Obstructs Cancellation
58. Since early 2020, Grubhub has offered diners a subscription plan called
Grubhub+. The subscription costs $9.99 per month plus taxes, and it auto-renews every month
unless consumers cancel.
59. To entice subscribers to sign up for Grubhub+, Grubhub touts free delivery—and
in many instances, “unlimited free delivery”—as the key perk. That is misleading: subscribers’
delivery orders are not actually free because Grubhub charges numerous fees, including a service
fee, a small order fee on orders less than $12, and a delivery fee on orders from restaurants that
do not participate in Grubhub+.
60. Once Grubhub lures diners into enrolling in Grubhub+, it obstructs their ability to
cancel by failing to provide an easy cancellation mechanism. Grubhub buries the cancellation
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option behind a series of pages in consumers’ account settings that many consumers have
difficulty locating. In contrast to the easy one- or two-click enrollment process, the cancellation
process is difficult and complicated. And as Grubhub is aware, its design has proven successful
in thwarting consumers’ cancellation attempts: it has received numerous consumer complaints
reporting difficulty canceling.
A. Grubhub Falsely Promises Free Delivery and Fails to Disclose
Applicable Fees
61. Since launching Grubhub+, Grubhub has prominently promoted free delivery as
the membership’s key feature. After identifying the delivery fee as diners’ “pain point,” Grubhub
focused on attracting diners to its subscription program using the promise of “unlimited free
delivery.”
i. Grubhub Advertisements Have Falsely Touted “Unlimited Free
Delivery”
62. Grubhub widely markets its subscription service online, including on platforms
such as YouTube, TikTok, Facebook, and Instagram. These advertisements feature the promise
of free delivery. For example, in a YouTube advertisement like the one shown below, celebrities
promote “unlimited free delivery” for “thousands of restaurants.”
Figure 6.
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63. Similarly, some advertisements, like the TikTok one below, emphasize that
Grubhub+ subscribers will never “ever pay for food delivery fees.”
Figure 7.
64. In fact, that is not true. Grubhub charges Grubhub+ subscribers for delivery both
on orders from the many restaurants on its platform that are not part of the Grubhub+ program—
a limitation that Grubhub nowhere discloses—and for orders from all restaurants through its
“service” and “small order” fees.
65. Grubhub continued to use deceptive “free delivery” advertisements even after
receiving the FTC’s Civil Investigative Demand in an investigation into the company’s practices.
And although, in some instances, Grubhub added—only after it learned of the investigation—a
vague, inconspicuous statement that “additional fees may apply,” Grubhub hides this information
in tiny font surrounded by brightly colored graphics.
66. For example, the following Facebook advertisement features “$0 delivery fees
with Grubhub+” in large, bold text.
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Figure 8.
The phrase “Terms and add’l fees apply” appears below only as an afterthought, in barely
legible text next to a large, distracting image of tacos.
ii. Grubhub’s Platform Emphasizes the False Free Delivery Promise
67. Consumers lured by the deceptive Grubhub+ advertising are bombarded with
further “free delivery” misrepresentations once they arrive on Grubhub’s platform. Throughout
the meal ordering and checkout process, Grubhub’s mobile application and website flood diners
with content reinforcing the impression in the advertisements—that Grubhub+ subscribers
receive free delivery. For example, as shown in the screenshot below, the top of the home screen
on the Grubhub application features a Grubhub+ banner that encourages diners to sign up to
“Unlock $0 delivery fees.”
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Figure 9.
68. Similarly, on the restaurant search results page at the start of a consumer’s
ordering process, many restaurant listings—like those pictured below—have featured a
crossed-out delivery fee that is replaced with “$0 with GH+,” conveying that the subscriber will
not be charged anything beyond the cost of the food.
Figure 10.
69. Grubhub continues to market the subscription plan at checkout, when a diner has
finished selecting menu items and is close to placing the order. Grubhub shows the potential
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savings on the particular order, displaying a large purple button encouraging diners to save
money by enrolling in Grubhub+.
70. Clicking the button reveals a pop-up window screen like the one shown below in
Figure 11, which features “$0 delivery fees” and allows diners to subscribe with a single click.
The consumer’s payment information is pre-populated in the pop-up, and below that is a large
yellow button labeled “Try 30 days free” that automatically enrolls consumers in Grubhub+ upon
clicking. The pop-up features “$0 delivery fees” as the key feature of the subscription.
Figure 11.
71. Many of the pop-up windows do not include any reference to other fees at all.
Even those that do, however, like the example above, never tell consumers that Grubhub will
charge a substantial fee on the vast majority of orders despite Grubhub’s “free delivery”
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promises. Nor do they reveal that Grubhub will charge a fee on all orders below a $12 threshold,
so those orders are also not “free.”
72. Grubhub thus broadcasts a simple message: for $9.99 per month, Grubhub+
subscribers will receive unlimited free delivery. Using this strategy, Grubhub lures consumers
into its auto-renew subscription plan to—in Grubhub’s words—“lock them in” to its platform.
iii. Grubhub+ Subscribers Have Been Misled by Deceptive Promises of
Free Delivery
73. Consumers persuaded by the promise of free delivery subscribe to Grubhub+ and
then are surprised to discover they are still charged for delivery in the form of other fees
described above. In addition, some subscribers are unexpectedly charged a “delivery fee” at
checkout, because they ordered from a restaurant that is not eligible for Grubhub+—a condition
that Grubhub also conceals. A July 2020 Grubhub strategy document specifically highlighted
restaurant selection as a top reason for Grubhub+ cancellations, with consumers reporting that “I
didn’t realize how few of the GH restaurants in my area were GH+,” and “it should be stated that
the free delivery is for a select amount of restaurants.” By around August 2021, for example,
only 60% of the restaurants on the platform participated in Grubhub+.
74. As Grubhub knows, many subscribers believe its promises of free delivery. It has
regularly received complaints from subscribers who had expected “free delivery” to mean that
Grubhub would charge no fees whatsoever on delivery orders. And an August 2020 customer
service analysis recognized that Grubhub+ subscribers remained unaware of what Grubhub
described internally as the “restrictions of the free delivery benefit.”
75. Unless diners carefully scrutinize the checkout page or their receipts, they may
never realize that their “free delivery” benefit is illusory. Many subscribers who eventually
discover the hidden costs contact Grubhub’s customer service to report the fees, which they
believe to be in error. Frustrated diners report: “I keep getting charged service fees of 1-5 dollars
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per order. Is this a mistake?”; “Why is there a service fee? I have Grubhub+”; “Why am I still
paying a ‘service fee’ if I pay for grubhub+?”; “I thought as a grubhub+ member, there were no
fees”; and “So grub hub just changed the name of the delivery fee? Why exactly am I paying for
seamless plus then?”
76. Grubhub designed its subscription program to bait consumers with claims of “free
delivery” while making up for lost revenue by assessing undisclosed fees. Those fees help
Grubhub “control the cost” of the subscription program and protect profitability. Grubhub’s
then-Senior Vice President of Growth admitted that this practice “[f]eels bad.”
77. Grubhub knows that its marketing tactics have misled subscribers about the
benefits of Grubhub+, but it continues to falsely promise “free delivery.”
B. Grubhub+ Enrollment Is Fast and Easy, While Cancellation Is Clunky and
Difficult
78. Grubhub has designed the Grubhub+ enrollment process to be fast, convenient,
and straightforward. The signup pages are everywhere—every page in the meal ordering flow
includes promotional banners or advertisements from which consumers can enroll in Grubhub+
with a single click in a pop-up window; they need not even navigate away from the meal
ordering or checkout page to do so.
79. By contrast, Grubhub’s cancellation process is more complex, clunky, and
difficult than the easily accessible, one- or two-click Grubhub+ enrollment process. Cancellation
requires the consumer to navigate to a designated page and complete a multi-page, multi-click
process.
80. A typical cancellation process proceeds as follows. First, the diner must click the
“Grubhub+ membership” option on the “Account” page. That membership page, shown below,
contains no option to cancel. Instead, it lists the various benefits of Grubhub+, through which the
consumer must scroll to reach the “Manage membership” button at the bottom of the page.
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Buried below this button, in hard-to-read text, is a statement that the consumer will be charged
$9.99 plus tax on a certain date.
Figure 12.
81. This inconspicuous statement is also the only place where Grubhub reports the
subscription’s billing date, which does not even mention the deadline to cancel and avoid the
next month’s charge. That makes it difficult for diners to take the very first step in canceling—
determining the date by which to do it.
82. Once diners have figured out when to cancel, have found the Account page, and
have clicked the “Grubhub+ membership” option, they must click on the “Manage membership”
button. That reveals the page shown below, which provides two options, one of which is “Cancel
membership.”
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Figure 13.
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83. But clicking “Cancel membership” here still does not terminate the membership.
Instead, Grubhub presents the consumer with another screen, shown below, featuring a bulleted
list of Grubhub+ subscription benefits and two more options: “Keep membership” and “Cancel
membership.”
Figure 14.
84. Clicking “Cancel membership” on this screen again does not actually terminate
the subscription. Grubhub forces the diner through yet another screen, shown below, offering a
$15 credit to stay subscribed. The button to “Stay and get $15” is highlighted in bright yellow,
above a muted “Cancel membership” button. Only by clicking on this “Cancel membership”
button can a consumer finally terminate the subscription. That means the consumer has to click a
“cancel” button at least three times.
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Figure 15.
85. While the Grubhub+ enrollment process can be completed in one or two clicks
from nearly anywhere in the diner’s account or anytime during the ordering flow, Grubhub hides
the cancellation option behind a multi-page, six-click flow that many consumers have difficulty
locating.
86. Grubhub has received numerous consumer complaints about the difficulty
canceling Grubhub+ subscriptions, including reports that “I keep getting charged . . . I do not see
an option to cancel on my end”; “I can’t find where to discontinue . . . I believe was charged last
month as well but I still couldn’t find where to do it”; and “Can you please help me cancel my
membership to grubhub+[.] I can not find account settings. I can not find grubhub+
membership.”
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87. Grubhub is aware that this complex cancellation process obstructs consumers’
attempts to terminate their subscriptions. Indeed, a company slide deck reporting customer
service complaints about Grubhub+ highlighted one subscriber who pleaded: “PLEASE cancel
this membership. I have been trying to cancel. No link found to cancel at ALL!” Despite this
awareness, Grubhub has not modified the cancellation process to address these issues.
III. Grubhub Locks Consumers’ Gift Card Balances
88. For years, Grubhub has employed a fraud detection system that has blocked
diners from completing orders and sequestered their gift card balances. While many companies
have fraud detection systems, in Grubhub’s case, the company has frozen diner accounts
containing large gift card amounts without notifying those diners or restoring access to those
funds, even when consumers complain or verify that they are not fraudsters. This practice has
deprived many bona fide diners of their gift card balances, which have ranged from tens to
thousands of dollars—and has allowed Grubhub to pocket money received from the purchasers
of those gift cards, without giving consumers anything of value in exchange. Moreover, it has
left many diners—including Grubhub+ subscribers paying $9.99 per month—unable to use their
accounts to complete delivery orders.
A. Grubhub Blocks Diners’ Accounts Without Notice or Explanation
89. Grubhub sells gift cards on its own website and through third-party retailers.
90. Often, people who receive Grubhub gift cards are experiencing significant, and
often difficult, life events. These individuals—who may be undergoing surgery or experiencing
an illness, childbirth, or the death of a loved one—often receive meal delivery gift cards from
family and friends to support them during this stressful time, when they may have no ability to
cook for themselves. These recipients may therefore load hundreds, and sometimes thousands of
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dollars in gift cards onto a Grubhub account. Many of these consumers have never used Grubhub
before, but they sign up for a new account just so they can use these gift cards.
91. To use gift cards, diners must “load” them into their accounts by adding the gift
cards as a payment method. Diners can do that easily. When they attempt to pay for their orders
using their gift cards, however, many find that Grubhub will not process their orders or will
cancel orders after they are placed. Unbeknownst to them, Grubhub has blocked their accounts,
because Grubhub often views the sudden loading of large gift card balances, or the use of gift
cards by a new account holder, as suspicious.
92. Any fraud detection system will produce false positives, but bona fide consumers
falsely flagged for fraud can generally verify their legitimacy when given the opportunity to do
so. But Grubhub denies its customers that opportunity: it provides no notice to consumers, no
way to unblock an account, and no way for bona fide gift card holders to get their money back
from the company.
93. Diners may discover a problem with their accounts in two ways. They may
complete an order with a gift card, but subsequently receive a cancellation email or see the
cancellation in their order history. Alternatively, Grubhub may immediately reject the order as
soon as it is placed, telling diners that “your order cannot be processed at this time,” and that
they should contact the restaurant directly—not Grubhub—to place an order. In addition to
canceling or rejecting those original orders, Grubhub also blocks the diners’ accounts, meaning
that it rejects or automatically cancels all future orders.
94. At each step, Grubhub neither tells diners why they are unable to place an order,
nor directs diners to contact Grubhub for further information.
95. Diners, for their part, do not understand what happened. Grubhub continues to
allow them to access their accounts, which look the same: they can still log in, browse
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restaurants, and add menu items to their bags as they usually would. But they can no longer
complete any orders, and Grubhub does not explain why. Diners are left with unusable gift card
balances, often worth hundreds or thousands of dollars, that are simply trapped in their accounts.
96. Worse still, Grubhub does not warn blocked diners not to add more gift cards to
their accounts or tell them these new funds will also be unusable. Sometimes consumers think
the reason they cannot place an order is because there is a problem with their current gift cards or
other payment methods, so they load even more gift cards onto their account while it is blocked.
Grubhub allows this, knowing full well that the funds will be frozen.
97. On top of that, diners spend significant time placing additional orders, sometimes
from a different restaurant or with a different payment method, trying to avoid what they believe
to be a technical glitch or payment error. One consumer who received a $500 gift card following
surgery for a double mastectomy reported that she attempted to place six orders in a week, all of
which were cancelled. She is far from alone: a Grubhub customer service document from 2021
reports that diners in this situation often try unsuccessfully to place multiple orders.
B. Grubhub Gives Consumers the Runaround
98. Frustrated consumers who cannot place orders or use their gift card balances often
turn to Grubhub’s customer service department for help. Many of these consumers are already
dealing with stressful life events and are desperate to resolve the issue quickly.
99. In one tragic example, a consumer received over $6,000 in Grubhub gift cards
after her son passed away. After Grubhub rejected all of her orders and blocked her account, the
grieving mother told customer service that her children would not be able to eat dinner that
evening unless Grubhub resolved the problem, but the representative failed to do so. Two days
later, the mother contacted customer service again, reporting that Grubhub had again rejected her
gift card orders ten times. The agent responded that she was working to “improve the service”
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and would send a report to the appropriate team. The consumer contacted Grubhub three times,
during which the problem was not resolved.
100. This consumer’s experience is typical. Indeed, an April 2022 internal document
acknowledges that, when a diner’s account is blocked for suspicious behavior, Grubhub does not
tell diners or even its own customer service agents “that future orders will no longer be accepted”
from the diner’s account—nor, indeed, does it provide any communication to the diner or any
information to its customer service agents about the issue. The document also admits that this
policy leads to customer dissatisfaction, increased complaint resolution time, and “repetitive
contacts” by the consumer.
101. Diners who press for more information are often told the account is temporarily
on hold for their “protection,” or that the issue will be “escalated” to Grubhub’s fraud team,
which will reach out to them in 24-48 hours. That, too, is a lie—Grubhub rarely gets back in
touch. This cycle often repeats many times: diners contact customer service a second, third, or
fourth time; Grubhub tells them there is no new information and does not allow them to speak to
a supervisor or anyone else; and customer service agents repeat that someone will call back in
24-48 hours, but no one ever does.
102. In the unusual instance where Grubhub does unblock an account, diners are often
able to place just one order using a gift card before finding themselves blocked again. These
diners are then forced back into the cycle of repeatedly contacting customer service and never
hearing back. Some diners, frustrated and exhausted, give up before they can use the full value of
their gift cards.
103. Bona fide recipients of multiple or large gift cards unfortunately bear the brunt of
Grubhub’s endless customer service loop. One consumer whose family of six became ill with
COVID-19 could use a $500 gift card only once before Grubhub blocked her account. Grubhub
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promised that someone would reach out within 48 hours to help, but no one ever did. Because
they could not get any food delivered for over seven days, they had to ask other people to bring
them food. Yet another consumer, who was staying near a cancer center while her husband was
receiving radiation treatment, could only use her $300 gift card once before she was blocked.
Grubhub purported to “escalate” her issue and repeated the same empty promises of hearing back
within 48 hours. The consumer reported that the experience was “extremely extremely
frustrating in an already vulnerable situation.” Similar sad stories abound.
C. Stressed Consumers Lose Money and Time
104. Diners with blocked accounts often lose their gift card balances, which are
frequently worth hundreds or thousands of dollars. An internal customer service document
showed that, in 2021, more than 97% of blocked diners during one particular month were never
unblocked, meaning that those diners were permanently denied the use of their gift cards. In such
cases, Grubhub provides no benefit to the owners of those gift cards, but nevertheless keeps the
money that friends or family originally paid to purchase the cards. Grubhub therefore has little
financial incentive to fix the problem.
105. Grubhub routinely refuses to refund diners for blocked gift card funds or allow
diners to transfer the gift cards to use in a different, unblocked account. Indeed, Grubhub
explicitly prohibits customer service agents from “unlinking” a loaded gift card in a blocked
account (or any other account) under any circumstances, or from asking supervisors to do so.
And, as mentioned earlier, Grubhub permits blocked account holders to add additional gift cards
without warning them the money will be lost.
106. On top of appropriating their gift card funds, Grubhub also prevents blocked
account holders from accessing other benefits. For example, diners who are paying for a
Grubhub+ subscription continue to be charged for the service, despite their inability to place any
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orders while their account is blocked. Similarly, Grubhub continues to run the clock on
Grubhub+ free trial memberships while an account is blocked. Diners also lose out on expiring
credits, like promotions and meal credits, while their accounts are blocked. The result is that
consumers with blocked accounts must continue to pay for services Grubhub prohibits them
from using. In addition, consumers waste time and energy, and suffer significant stress dealing
with their accounts, commonly without success, and often on top of already taxing life
circumstances.
107. Since at least 2019, Grubhub has received numerous complaints about consumers’
inability to use their gift card balances and other benefits, but it has not fixed these issues. A
2021 Grubhub document highlights blocked accounts and unusable gift cards as the category
with the most complaints to the Better Business Bureau. Similarly, blocked accounts remain one
of the largest internal complaint categories. In June 2022 alone, nearly 7,000 diners reported
suffering from blocked accounts, resulting in more than 11,000 customer service contacts.
108. Because Grubhub has not taken steps to address the issue, diners continue to
complain about Grubhub’s “unilateral restriction and lack of notification” about blocked
accounts, and its “effective theft of funds.” Consumers cannot reasonably avoid these harms
because Grubhub does not tell them that they have been blocked; why they have been blocked; or
what, if anything, they can do to restore their accounts and access their gift card funds again.
These harms to consumers outweigh any purported benefit.
IV. Grubhub Falsely Represents an Affiliation with Restaurants Without Their
Permission, Damaging Their Revenues and Reputation
109. Grubhub places on its platform Unaffiliated Restaurants that have not given
Grubhub permission to be listed and that have not allowed Grubhub to take diners’ orders and
deliver food on their behalf. In most cases, the restaurants do not even know Grubhub has added
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them to its offerings. Similarly, Grubhub does not tell diners which restaurants on its platform
are unaffiliated.
110. By falsely representing an affiliation with these restaurants, Grubhub boosts its
own offerings, expands its scale, and fuels its business—but at significant cost to the restaurants
that have not consented to a partnership with Grubhub.
111. In particular, Grubhub’s practices harm the Unaffiliated Restaurants by diverting
business away from the restaurants’ own delivery services. The restaurants’ reputations also
suffer, because the lack of an affiliation between Grubhub and the restaurant often results in a
bad experience for diners, such as inaccurate orders and slow deliveries. Although these
problems are entirely Grubhub’s fault, the diners end up blaming the Unaffiliated Restaurants,
which ultimately lose business. When thousands of restaurants complained to Grubhub and
demanded to be removed from the platform, Grubhub attempted to coerce them into signing a
paid contract instead.
112. In addition, distinct features of platform markets incentivize platforms to rapidly
increase scale. Digital platforms, like Grubhub, that enable interactions between distinct users on
the platform benefit from network effects. An increased number of restaurant listings increases
the appeal of platform to customers, and an increased number of customers increases the appeal
of the platform to restaurants. Such network effects can confer a powerful incumbency advantage
on a platform that can get to scale quickly, creating barriers to entry and competition.
113. These features of digital markets can mean that firms that achieve the necessary
scale to take off can experience accelerated growth. This type of accelerated growth, whether
achieved through fair or unfair methods of competition, can create a formidable advantage,
effectively blocking off the market to competition.
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A. Grubhub Adds Restaurants Without Their Knowledge or Consent to
Artificially Boost Supply
114. In the food-delivery business, companies are incentivized to increase the number
of restaurants on their platforms to draw more diners. Diners will often decide which delivery
service to use based on the number of available options. A larger restaurant supply ensures that a
diner’s particular choice—her favorite diner, the Thai restaurant she feels like ordering from that
evening, the pizza place her kids request on Friday night—is available. Boosting the number of
offerings is thus critical to attracting diners and growing market share.
115. In early 2019, Grubhub executives directed the addition of Unaffiliated
Restaurants, considering them a critical part of the company’s business strategy. A former
executive sent other members of the management team and employees a whiteboard drawing of
things “that I really really really really want,” telling them that “I will bug you every Friday to
email your progress and milestones” on these projects. One of those included the “expansion” of
Unaffiliated Restaurant delivery.
116. Under that directive, Grubhub’s Unaffiliated Restaurants grew to more than
325,000 at its peak, and accounted for between 20% and 53% of Grubhub’s total restaurant
listings from 2019 to 2022. Grubhub determined that Unaffiliated Restaurants led to “massive
growth everywhere” and was a successful “mechanism to gain national scale.” In Chicago, for
instance, Grubhub reported that it had “added substantially all [Unaffiliated Restaurant]
inventory currently available” by 2020, becoming “the #1 delivery provider in Chicago” in terms
of restaurant supply.
117. Similarly, by early 2020, Grubhub’s restaurant supply surpassed DoorDash’s—a
major competitor—as a result of its rapid addition of Unaffiliated Restaurants. By that time, too,
the number of Unaffiliated Restaurants exceeded the number of contracted restaurants on
Grubhub’s platform.
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118. Grubhub executives boasted about these results in a February 2020 shareholder
letter. They told investors that Grubhub more than doubled its restaurant inventory in only three
months by the “rapid addition” of 150,000 Unaffiliated Restaurants.
B. Grubhub’s Chaotic Ordering Process Harms Unaffiliated Restaurants
119. Grubhub’s addition of Unaffiliated Restaurants led to a dramatic increase in its
restaurant supply, but it also caused considerable harm to the affected restaurants.
120. First, diners place orders through the Grubhub platform when they otherwise may
have ordered directly from the restaurant itself—diverting business away from the restaurant’s
own delivery business and own delivery drivers. In fact, Grubhub’s Unaffiliated Restaurant
listings typically show up as advertisements at the top of the Google search page, above the
restaurant’s own listing. As a result, diners searching for the restaurant are first directed to a link
to order delivery through Grubhub—not through the restaurant itself.
121. On top of that, Grubhub’s fulfillment process for Unaffiliated Restaurants causes
numerous problems that ultimately affect the restaurants’ bottom line. For a contracted
restaurant, a diner will place an order and make the payment on Grubhub’s desktop or mobile
site; that order will automatically be sent to the restaurant to fulfill, and to the driver to deliver.
122. By contrast, because Unaffiliated Restaurants do not have ordering systems that
are integrated with Grubhub, the ordering process is more difficult and time consuming. For
those orders, Grubhub sends the diner’s order to the delivery driver, who then must separately,
and manually, place the real order—either by calling the restaurant or placing an order on the
restaurant’s website.
123. Once at the restaurant, the driver must pay using a Grubhub card. Sometimes, the
Grubhub cards have insufficient funds or are otherwise declined; other times, the driver
discovers that the restaurant is cash only. Drivers are not allowed to use a different payment
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method, because Grubhub will not reimburse them later. When problems like these arise,
Grubhub provides no real-time troubleshooting to help drivers deal with payment problems, as it
does when drivers experience issues with orders from affiliated restaurants.
124. In these instances, the Unaffiliated Restaurant, which has already prepared the
food, does not get paid. The restaurant must either let the food go to waste, or turn the food over
without receiving payment to prevent complaints from disgruntled diners.
125. Indeed, Unaffiliated Restaurants often lose business because consumers are
unhappy with their experience ordering through Grubhub. Because Grubhub does not have
relationships with the restaurants, it must cobble together restaurant information—such as hours
of operation, addresses, menu items, menu prices, and delivery times—from third-party sources.
Grubhub does not manually validate this information for accuracy.
126. These inaccuracies often create serious problems. A driver who calls an
Unaffiliated Restaurant to place a diner’s order may discover it is actually closed, or the ordered
items are unavailable, or the listed prices are incorrect. In many instances, Grubhub may not
inform diners of these problems or help diners resolve them, simply canceling the diner’s order
instead.
127. Orders from Unaffiliated Restaurants also take longer to place and deliver
because of the roundabout ordering process described above. And because Grubhub’s listed
delivery times are often incorrect, they set unrealistic expectations and increase customer
complaints.
128. Grubhub’s diner-facing platform does not distinguish between affiliated and
Unaffiliated Restaurants, so frustrated diners do not know that Unaffiliated Restaurants did not
consent to being on Grubhub. As a result, they attribute their bad experiences to the restaurants,
rather than Grubhub. They complain to the restaurants and leave negative reviews on Google,
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Yelp, and other websites, damaging the restaurants’ reputations. Ultimately, they stop ordering
from the Unaffiliated Restaurants.
129. Grubhub also charges larger diner fees for orders from Unaffiliated Restaurants,
to compensate for the higher costs of fulfilling these orders and because it earns no commissions
from Unaffiliated Restaurants. In early 2020, for example, diners paid an average of $3.87 to
$5.56 in fees for an order from a partner restaurant, compared to $10.99 from an Unaffiliated
Restaurant. Diners thus pay more for their meal than if they had ordered from the Unaffiliated
Restaurant directly, from a competitor food-delivery platform with which the Unaffiliated
Restaurant has actually contracted, or from a different restaurant with which Grubhub had
contracted.
130. Grubhub’s Unaffiliated Restaurant practices negatively affect other parties, too.
Orders from these restaurants require more effort from drivers, who must manually place the
diner’s order and make the payment. Drivers also have to deal with frustrated diners when the
order is wrong or delayed. Grubhub’s partner restaurants also lose business to Unaffiliated
Restaurants, which are listed on the same platform but are not paying Grubhub commissions.
C. When Unaffiliated Restaurants Request Removal, Grubhub Pressures Them
To Sign Contracts Instead
131. Unaffiliated Restaurants complain to Grubhub when they discover the company
has listed them without their consent. To be removed, they must go through a difficult, lengthy,
and opaque process, and often succeed only with incessant follow up.
132. Grubhub not only jeopardizes the reputations and threatens the businesses of
Unaffiliated Restaurants, but also attempts to coerce Unaffiliated Restaurants to enter into paid
contracts. When an Unaffiliated Restaurant contacts Grubhub about removal, customer service
agents are required to transfer the call to the sales team, which warns that the restaurant could
lose any business it has gained on the platform. As stated in a marketing plan, Grubhub’s goal is
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“to get [Unaffiliated Restaurants] hooked on the incremental online business, and then negotiate
with them to sign a traditional contract.” In fact, Grubhub may even give Unaffiliated
Restaurants an artificial boost—in the form of higher rankings and greater visibility—to drive up
demand and help make the sale.
133. Other times, Grubhub simply ignores an Unaffiliated Restaurant’s removal
requests. Restaurants complain to Grubhub for months, or years, before Grubhub takes any
action. In one case, a restaurant requested removal for over three years, to no avail. The
restaurant finally complained directly to a Grubhub executive that the company was destroying
the integrity of its food and reputation, because Grubhub’s drivers did not have the proper
containers to transport its food, could not answer diners’ questions, and made delayed deliveries
of lukewarm and soggy food. In an effort to stop the Grubhub orders, this restaurant even
blocked its systems from accepting Grubhub credit cards. Unfortunately, this restaurant’s
experience is all too common.
134. Grubhub often does not remove Unaffiliated Restaurants until there is serious
pressure to do so, such as when the restaurants threaten legal action. Thousands of Unaffiliated
Restaurants have sent cease-and-desist letters to Grubhub, complaining that they have repeatedly
requested removal without success.
135. In other instances, restaurants have turned to the press. In one case, a reporter
informed Grubhub that the local news station would be airing a story about Grubhub’s
unauthorized orders. As Grubhub scrambled to remove the listings before the story aired, its
employees acknowledged internally that Grubhub had never responded when one of the
restaurants had emailed to be removed.
136. In another case, Grubhub reached out to some Unaffiliated Restaurants only after
it learned that the New York Post would be running a similar story. Grubhub admitted that the
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goal of this outreach was to be able to tell the Post that it was actively responding to the
restaurants’ requests.
137. In yet another example, a reporter from Eater told Grubhub that he was doing a
story about how the company was “impersonating a restaurant.” Grubhub removed the restaurant
in three hours, noting that “this situation risks spiraling badly” and that the restaurant owner has
“a good argument to make.”
138. Grubhub thus calibrates its removal process to have the right amount of “friction”
so that it can keep the Unaffiliated Restaurants—either by ignoring their removal requests or
converting them to partner restaurants. As a Grubhub employee summed up: “Not good
necessarily but the company goal was supply.”
D. Grubhub Has Continued Its Unaffiliated Restaurant Practices Despite
Repeated Complaints
139. As top executives have acknowledged, Grubhub’s Unaffiliated Restaurant
practices are bad for consumers, but they are an easy way to grow the business. And Grubhub
does not even try to keep the problems a secret. In the fall of 2019—around the time Grubhub
first began adding Unaffiliated Restaurants—executives already knew these practices were
troublesome, freely admitting in a shareholder letter that “we believe [Unaffiliated Restaurant]
options are the wrong long-term answer for diners, restaurants, and shareholders.” The practices,
they acknowledge, create a “suboptimal” experience. Yet Grubhub would continue apace, the
letter explained, because Unaffiliated Restaurants were an “extremely efficient and cheap” way
to boost restaurant inventory, and would help Grubhub quickly double its restaurant supply—and
fuel its growth.
140. Internally, a former executive also acknowledged continuing concerns about the
“poor” quality of service for Unaffiliated Restaurants, noting that “[w]e are literally doubling the
restaurant inventory diners see with almost no planning/analysis.” He asked his team: “Should
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we be warning [diners] the experience will be different? More expensive? Longer ETA because
they are ‘different’? Right now, I am pretty sure people don’t see the massive fees until
checkout.”
141. Employee grievances about Unaffiliated Restaurants also multiplied. In one
document, an employee warned that practices around Unaffiliated Restaurants “are terrible
because [restaurants] have zero control over their brand or user experience. I don’t think this
option should be something we offer to restaurants, ever.”
142. Grubhub also audits its Unaffiliated Restaurants to track the causes of customer
complaints and order cancellations. The audits revealed that Unaffiliated Restaurants often refuse
to fulfill an order when they learn that it is coming from Grubhub. The restaurants do not want to
work with Grubhub, or they suspect a scam.
143. Rather than fix these problems, Grubhub instead took steps to make its practices
difficult for diners and restaurants to detect. Grubhub still does not disclose to diners when they
are ordering from an Unaffiliated Restaurant or warn that those orders may be subject to higher
fees, delays, or order problems.
144. Grubhub also goes to great lengths to hide its involvement from Unaffiliated
Restaurants. It directs drivers to place orders under the diner’s name and then to impersonate the
diner at the restaurant. A former executive also discussed with employees other strategies to
remain undetected, such as telling drivers to leave their Grubhub thermal bags outside during
pickups from Unaffiliated Restaurants.
145. Grubhub also conceals its tactics when adding Unaffiliated Restaurants to its
online listings. It tries to “be as close to unnoticed as possible until the volume gets super
material,” when Grubhub can use that order volume to pressure restaurants to partner with the
company.
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146. Similarly, Grubhub avoids adding Unaffiliated Restaurants that might resist or
vocalize their concerns. In one instance, an employee advised not to add Texas Roadhouse,
which had previously sent Grubhub a cease-and-desist letter. The employee also asked whether
Long John Silver’s, Ruth’s Chris, and Dairy Queen had “cooled off” long enough to be added
back on the platform. And another employee concluded that Grubhub should be fine adding a
few other chains with whom Grubhub has had “no active discussions.”
147. Despite these well-documented harms, Grubhub continues listing Unaffiliated
Restaurants without their knowledge and consent and has indicated no plans to stop the practice.
Restaurants cannot reasonably avoid these harms because Grubhub adds them in secret and does
not comply when the restaurants ask to be removed. These harms to consumers and competition
outweigh any countervailing benefits, which Grubhub has conceded are nearly nonexistent.
Indeed, the only benefit is to Grubhub, which can add restaurant supply quickly and cheaply.
V. Grubhub Has Misled Drivers About How Much They Will Earn
148. Grubhub requires hundreds of thousands of drivers to carry out its delivery
services. As another part of the company’s underhanded growth strategy, Grubhub has lured
people into signing up by promising they can earn enticing hourly rates, like $26 per hour, while
working flexible hours and part-time schedules. In reality, however, drivers earn far less. In
2023, only approximately the top 2% of Grubhub drivers typically earned the advertised amount,
and the median earnings were only about $11 per hour.
A. Overview of Grubhub’s Gig System
149. Grubhub relies on gig workers to meet the demands of its millions of diners,
enlisting over 200,000 delivery drivers across the country at any given time.
150. Grubhub treats its gig workers as independent contractors who are not entitled to
the benefits enjoyed by traditional employees, such as salaries, benefits, regular work schedules,
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or the protection of employment and labor laws. Drivers must also supply their own cars,
insurance, and gas at their own expense. This arrangement saves Grubhub significant labor costs
by allowing it to quickly add or shed drivers to meet customer demand and to avoid paying
drivers for any time they are not actively on a delivery route. Grubhub actively targets people
who may be attracted to non-traditional or seasonal work schedules, such as college students and
small business owners.
151. When Grubhub drivers work a shift, they log into Grubhub’s mobile application
and toggle themselves “on,” which indicates they are available to accept deliveries.
152. Once a driver has toggled “on,” the Grubhub application may send them an offer
for a delivery accompanied by the total payment for completing it. The driver can then decide to
accept or decline that offer. It is difficult to predict exactly when or how many offers will come
in; drivers can wait for hours without receiving a single offer, or they can get a string of offers
with little or no waiting time in between. When they are done driving, they toggle “off.”
153. Drivers can work on an ad hoc basis by toggling “on” and “off” whenever they
want. Or they can sign up in advance for scheduled “blocks” for set periods of time (for example,
12-2 p.m. on Friday), and then log in during those specified blocks.
154. Grubhub generally pays its drivers on a per-delivery basis. Broadly speaking, the
total delivery pay consists of three main components (in addition to some optional, ad hoc
components): mileage, time spent on the road, and tips.
155. The mileage accounts for the total distance driving to the restaurant to pick up the
order and then to the diner to drop off the order. The time accounts for how long it takes to drive
to the restaurant, wait for the order, and then drive to the diner. The mileage and time
components are based on estimates Grubhub makes at the time it sends the offer to the driver. If
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the actual mileage and time end up being higher than the estimate, the driver is generally not
compensated for the extra work.
156. Tips, the third component, are paid by the diner. Most drivers report that tips
make up 40-60% of their pay. That means that diners—not Grubhub—pay nearly half or more of
a driver’s earnings.
B. Grubhub Has Made Unsubstantiated Earnings Claims
157. To entice people to sign up as Grubhub drivers, Grubhub has disseminated
advertisements that falsely promise consumers will earn a certain hourly rate, which varies
depending on the location. The advertised hourly rate is high—often more than double the
jurisdiction’s minimum wage. For instance, in January 2023, Grubhub touted on Facebook that
workers can “Earn up to $40 per hour as a Grubhub delivery driver in New York City!”
Figure 16.
158. Similarly, in August 2022, it advertised on Facebook and Instagram: “Want to
earn up to $26/hr delivering food around Denver?”
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Figure 17.
159. And in April 2023, it advertised on Google: “Up to $26 Hourly – Earn Money in
Chicago.”
Figure 18.
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160. Grubhub’s advertisements provide no clarification or qualification of the hourly
earnings claim.
161. Grubhub has placed these advertisements on search engines like Google and
Bing; social media sites like Facebook, Instagram, TikTok, and Snapchat; and job boards like
Craigslist. The company has spent hundreds of thousands of dollars on these advertisements,
which have generated significant clicks and impressions. Since at least 2019, Grubhub regularly
ran these hourly earnings advertisements in thousands of markets across the United States.
162. The represented hourly earnings in these advertisements are material to a
consumer’s decision to become a Grubhub delivery driver. Nearly half of Grubhub’s drivers rely
on the company as their full-time income source. Internal Grubhub analyses reiterate that
“earning potential is repeatedly identified as the fundamental concern drivers have with
Grubhub,” over other purported benefits such as flexibility. Similarly, company studies confirm
that the “most motivating” reason for becoming a driver is the ability to make money.
163. Grubhub’s inflated hourly earnings advertisements attracted a surge of drivers:
when the advertisements started running in 2019, they led to a 398% increase in driver leads and
a 278% jump in the rate at which drivers click on the advertisement, reducing Grubhub’s
marketing costs by 79% per lead.
164. Grubhub’s hourly earnings claims in these advertisements, however, are false or
unsubstantiated. According to Grubhub’s own data, the actual earnings for Grubhub drivers fall
well below the advertised hourly rate. With respect to the January 2023 advertisement about
earning “up to $40 per hour” in New York City, for example, the median earnings of a Grubhub
driver in New York City at that time were only $10 per hour. In addition, only 0.1% of New
York City drivers made the claimed $40 per hour during that time period.
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165. Similarly, when Grubhub advertised in April 2023 that Chicago drivers could earn
“Up to $26 Hourly,” that was not true, either. The median earnings of a Chicago driver were only
$11 per hour, and only 1.3% of drivers earned the promised $26 per hour.
166. Similar claims that Grubhub has made in other parts of the country also are
unsubstantiated. The chart below shows a sample of the advertised hourly earnings in some of
Grubhub’s core markets, compared to the actual median earnings:
Table 1.
Percent of
Median Drivers
Advertised Actual Earning
Date of Hourly Hourly Advertised
Advertisement Location Earnings Earnings Amount
January - August 2022 Baltimore $25 $14 2.2%
January - August 2022 Boston $26 $18 5.4%
January - August 2022 Chicago $26 $15 1.9%
January - August 2022 Denver $26 $17 3.7%
January - August 2022 New York City $26 $12 1.3%
January - August 2022 Philadelphia $24 $13 3.6%
January - August 2022 Portland $24 $18 7.3%
August 2022 Baltimore $25 $13 2.1%
August 2022 Boston $26 $17 5.9%
August 2022 Chicago $25 $13 1.7%
August 2022 Denver $26 $17 2.3%
August 2022 New York City $26 $10 1.5%
August 2022 Philadelphia $24 $12 4.4%
August 2022 Portland $24 $17 8.6%
January 2023 New York City $40 $10 0.1%
February 2023 Boston $26 $13 3.5%
February 2023 Denver $26 $14 2.3%
February 2023 National $26 $11 1.9%
February 2023 New York City $26 $10 1.5%
April 2023 Chicago $26 $11 1.3%
167. This table shows that only around the top 2% of drivers earn Grubhub’s
advertised hourly rate. At best, that figure is about 9% in these examples. Because Grubhub
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closely tracks the amounts it pays drivers, it knows that most drivers make substantially less than
the advertised amounts. Despite knowing from its own data that the vast majority of delivery
drivers were not making anywhere near the claimed hourly rates, Grubhub continued to run
advertisements with unsubstantiated hourly earnings claims.
168. Due to the disconnect between Grubhub’s representations and drivers’ actual
earnings, drivers quickly leave Grubhub. Internal analyses show that Grubhub loses 50% of its
driver population every 7-8 months. This high driver churn rate places even greater pressure on
Grubhub’s marketing efforts to recruit new drivers.
C. FTC Sends Grubhub Notice of Penalty Offenses
169. In October 2021, the FTC sent Grubhub a letter that included a copy of the Notice
of Penalty Offenses Concerning Money-Making Opportunities. Grubhub received this letter on
October 27, 2021. The letter and Notice of Penalty Offenses identified specific acts or practices
that the Commission has determined are unfair or deceptive and violate Section 5 of the FTC
Act, 15 U.S.C. § 45.
170. As detailed in the Notice enclosed with the letter, the Commission determined in a
series of litigated decisions that, among other things, it is an unfair or deceptive trade practice to
make false, misleading, or deceptive representations concerning the profits or earnings that may
be anticipated by a participant in a money-making opportunity (i.e., a person who has been
accepted or hired for, has purchased, or otherwise is engaging in the money-making
opportunity).
171. The Notice cited a series of litigated decisions that determined, among other
things, that it is an unfair or deceptive trade practice to make false, misleading, or deceptive
representations concerning the profits or earnings that may be anticipated by a participant in a
money-making opportunity. The Notice warned Grubhub of its potential liability for civil
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penalties under Section 5(m)(1)(B) of the FTC Act, for knowingly engaging in acts or practices
determined by the Commission to be unfair or deceptive, and thus unlawful.
172. The letter instructed Grubhub to contact Commission staff if it had any questions
or to visit the Commission’s website at www.ftc.gov/MMO-notice to obtain copies of the case
decisions discussed in the Notice.
173. Despite receiving the Notice of Penalty Offenses, Grubhub continued to make
misleading earnings claims in marketing its money-making opportunity.
* * *
174. Based on the facts and violations of law alleged in this Complaint, Plaintiff FTC
has reason to believe that Defendants are violating the following laws enforced by the
Commission:
VIOLATIONS OF THE FTC ACT
175. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts
or practices in or affecting commerce” and “unfair methods of competition.”
176. Misrepresentations or deceptive omissions of material fact constitute deceptive
acts or practices prohibited by Section 5(a) of the FTC Act.
177. Acts or practices are unfair under Section 5 of the FTC Act if they cause or are
likely to cause substantial injury to consumers that consumers cannot reasonably avoid
themselves and that are not outweighed by countervailing benefits to consumers or competition.
15 U.S.C. § 45(n).
178. Conduct is an unfair method of competition under Section 5 of the FTC Act if it is
undertaken by an actor in the marketplace and goes beyond competition on the merits. Deceptive
conduct that negatively affects competitive conditions goes beyond competition on the merits.
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Count I (by Plaintiff FTC)
Deceptive Claims Regarding Price for Grubhub’s Services
179. In numerous instances in connection with the advertising, marketing, promotion,
offering for sale, or sale of food ordering and delivery services, Defendants represent, directly or
indirectly, expressly or by implication, that:
a. Grubhub customers will pay a specific amount for Grubhub’s delivery
services; or
b. Grubhub+ subscribers will receive free delivery.
180. In numerous instances, Defendants’ representations as set forth above are false or
misleading.
181. Therefore, Defendants’ representations constitute a deceptive act or practice in
violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
Count II (by Plaintiff FTC)
Unfair Account Blocks
182. In numerous instances, Defendants deny consumers use of their accounts and
funds, including by doing so without notifying consumers or providing recourse to restore such
use.
183. Defendants’ acts or practices set forth above have caused or are likely to cause
substantial injury to consumers that consumers cannot reasonably avoid themselves and that are
not outweighed by countervailing benefits to consumers or competition.
184. Therefore, Defendants’ acts or practices constitute unfair acts or practices in
violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a), (n).
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Count III (by Plaintiff FTC)
Unfair Listing of Restaurants Without Consent
185. In numerous instances, Defendants have created listings for restaurants without
the restaurants’ express informed consent and have deficiently processed diners’ orders from
those restaurants.
186. Defendants’ actions set forth above have caused or are likely to cause substantial
injury to these restaurants that the restaurants cannot reasonably avoid themselves and that is not
outweighed by countervailing benefits to the restaurants or competition.
187. Therefore, Defendants’ acts or practices constitute unfair acts or practices in
violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a), (n).
Count IV (by Plaintiff FTC)
Unfair Methods of Competition
188. Grubhub competes in the market for prepared meal delivery both with
independent restaurants that offer delivery services and with other third-party food delivery
platforms that process and/or deliver prepared meals to customers.
189. In numerous instances, Grubhub has created listings for restaurants without the
restaurants’ express informed consent and has deficiently processed diners’ orders from those
restaurants. Grubhub pursued this deceptive tactic explicitly in order to boost growth and achieve
greater scale. Grubhub’s creation of listings for unaffiliated restaurants and processing of diners’
orders from those restaurants is deceptive because Grubhub represents to diners that the
restaurants are affiliated with Grubhub when they are not. Grubhub has also gone out of its way
to conceal its tactics from restaurants, even as its practice of listing unaffiliated restaurants harms
the revenues and reputations of those restaurants. When asked to remove such listings, Grubhub
has ignored the request or sought to leverage the request to coerce the restaurant into signing up
for a partnership with Grubhub.
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190. Grubhub represents to diners, directly or indirectly, expressly or by implication,
including by creating listings for Unaffiliated Restaurants and processing diners’ orders from
those restaurants, that Grubhub maintains an affiliation with those Unaffiliated Restaurants. In
fact, however, in numerous instances in which Grubhub makes the representations set forth
above, Grubhub has no affiliation with those Unaffiliated Restaurants. These representations are
material to diners.
191. Grubhub also deceives meal delivery customers about its fees, to induce them to
sign up for and use its service. This conduct constitutes methods of competition in the market for
prepared meal delivery. These practices are not conditions of the marketplace, but tactics used by
Grubhub to gain scale rapidly and to gain advantage over other third-party meal delivery
platforms and independent restaurants that offer meal delivery.
192. These practices are deceptive and coercive and tend to negatively affect
competitive conditions in the meal delivery market, with respect to both independent restaurants
that offer delivery services and other third-party food delivery platforms that process and/or
deliver prepared meals to diners. This deceptive and coercive conduct tends to negatively affect
competitive conditions because it enables Grubhub to gain customers, divert sales from rivals,
grow its operations, and gain an unfair advantage over competing delivery services. Moreover,
this deceptive and coercive conduct and the advantages gained by those engaged in such conduct
punish honest competitors, making it infeasible for companies not engaged in similarly deceptive
and coercive conduct to effectively compete in the prepared meal delivery market. Thus, the
practices go beyond competition on the merits, are unfair, and degrade the quality of competition
in that market. Grubhub’s strategy of using deceptive and coercive tactics to boost its growth and
scale constitute an unfair method of competition.
193. Therefore, Grubhub’s conduct set forth above constitutes an unfair method of
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competition in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a), (n).
Count V (by Plaintiff FTC)
False or Unsubstantiated Driver Earnings Claims
194. In numerous instances in connection with the advertising, marketing, or
promotion of Defendants’ food delivery driver program, Defendants have represented, directly or
indirectly, expressly or by implication, that drivers are likely to earn a set hourly rate, such as
$26 per hour.
195. The representations set forth above are false or misleading or were not
substantiated at the time the representations were made.
196. Therefore, the making of the representations constitutes a deceptive act or practice
in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
VIOLATIONS OF THE RESTORE ONLINE SHOPPERS’ CONFIDENCE ACT
197. In 2010, Congress passed the Restore Online Shoppers’ Confidence Act, 15
U.S.C. §§ 8401-05, which became effective on December 29, 2010. Congress passed ROSCA
because “[c]onsumer confidence is essential to the growth of online commerce. To continue its
development as a marketplace, the Internet must provide consumers with clear, accurate
information and give sellers an opportunity to fairly compete with one another for consumers’
business.” 15 U.S.C. § 8401.
198. Section 4 of ROSCA, 15 U.S.C. § 8403, generally prohibits charging consumers
for goods or services sold in transactions effected on the Internet through a negative option
feature, as that term is defined in the FTC’s Telemarketing Sales Rule (“TSR”), 16 C.F.R.
§ 310(w), unless the seller: (a) clearly and conspicuously discloses all material terms of the
transaction before obtaining the consumer’s billing information; (b) obtains the consumer’s
express informed consent before making the charge; and (c) provides simple mechanisms to stop
recurring charges. See 15 U.S.C. § 8403.
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199. The TSR defines a negative option feature as: “in an offer or agreement to sell or
provide any goods or services, a provision under which the consumer’s silence or failure to take
an affirmative action to reject goods or services or to cancel the agreement is interpreted by the
seller as acceptance of the offer.” 16 C.F.R. § 310.2(w).
200. The auto-renewal provision of Defendants’ Grubhub+ subscription or
membership program is a negative option feature as defined by the TSR, 16 C.F.R. § 310.2(w).
201. Pursuant to Section 5 of ROSCA, 15 U.S.C. § 8404(a), and Section 18(d)(3) of
the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of ROSCA shall be treated as a violation of a
rule promulgated under Section 18 of the FTC Act, 15 U.S.C. § 57a, and therefore a violation of
ROSCA constitutes an unfair or deceptive act or practice in or affecting commerce, in violation
of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
202. For each violation of ROSCA, Section 19 of the FTC Act, 15 U.S.C. § 57b,
authorizes the Court to grant relief as it finds necessary to redress injury to consumers, including
monetary relief, rescission or reformation of contracts, the refund of money or return of property,
and public notification respecting the rule violation or the unfair or deceptive act or practice.
Count VI (by Plaintiff FTC)
Violation of ROSCA: Inadequate Disclosure
203. In numerous instances in connection with charging consumers for goods or
services sold in transactions effected on the Internet through a negative option feature, including
Grubhub+, Defendants have failed to clearly and conspicuously disclose, before obtaining the
consumer’s billing information, all material terms of the transaction, including all fees applicable
to Grubhub+ orders.
204. Defendants’ practices as set forth above are violations of Section 4 of ROSCA, 15
U.S.C. § 8403(1), and therefore constitute unfair or deceptive acts or practices in violation of
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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Count VII (by Plaintiff FTC)
Violation of ROSCA: Failure to Provide Simple Cancellation Mechanism
205. In numerous instances in connection with charging consumers for goods or
services sold in transactions effected on the Internet through a negative option feature, including
Grubhub+, Defendants failed to provide a simple mechanism for a consumer to stop recurring
charges from being placed on the consumer’s credit card, debit card, bank account, or other
financial account.
206. Defendants’ practices as set forth above are violations of Section 4 of ROSCA, 15
U.S.C. § 8403(3), and therefore constitute unfair or deceptive acts or practices in violation of
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
VIOLATIONS OF THE IMPERSONATION RULE
207. Under the Impersonation Rule, 16 C.F.R. pt. 461, it is a violation to “materially
and falsely pose as” a government entity or a business, as well as to “materially misrepresent” an
“affiliation with, including endorsement or sponsorship by” a government entity or a business.
208. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of
the Impersonation Rule constitutes an unfair or deceptive act or practice under Section 5(a)(1) of
the FTC Act, 15 U.S.C. § 45(a)(1).
209. For each violation of the Impersonation Rule, Section 19 of the FTC Act, 15
U.S.C. § 57b, authorizes the Court to grant relief as it finds necessary to redress injury to
consumers, including monetary relief, rescission or reformation of contracts, the refund of
money or return of property, and public notification respecting the rule violation or the unfair or
deceptive act or practice.
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Count VIII (by Plaintiff FTC)
Violations of the Impersonation Rule
210. In numerous instances in connection with the advertising, marketing, promotion,
offering for sale, or sale of food ordering and delivery services, including by creating listings for
Unaffiliated Restaurants and processing diners’ orders from those restaurants, Defendants
represent to diners, directly or indirectly, expressly or by implication, that Grubhub maintains an
affiliation with those Unaffiliated Restaurants.
211. In fact, in numerous instances in which Defendants make the representations set
forth above, Defendants have no affiliation with those Unaffiliated Restaurants.
212. Therefore, Defendants’ acts or practices are violations of the Impersonation Rule,
16 C.F.R. pt. 461, and therefore also constitute unfair or deceptive acts or practices in violation
of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
VIOLATIONS OF PRIOR COMMISSION DETERMINATIONS CONCERNING
UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN COMMERCE
213. Pursuant to Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. § 45(m)(1)(B), if the
Commission has determined in a proceeding under section 5(b) of the FTC Act, 15 U.S.C.
§ 45(b), that an act or practice is unfair or deceptive and issued a final cease and desist order with
respect to the act or practice, then a person, partnership, or corporation that engages in such act
or practice with actual knowledge that such act or practice is unfair or deceptive and is unlawful
under Section 5(a)(1) of the FTC Act shall be liable under the FTC Act for such relief as may be
appropriate.
214. In prior litigated decisions, the Commission has determined that false, misleading,
or deceptive representations concerning earnings in a money-making opportunity—like
Grubhub’s false earnings claims about delivery workers—are unfair or deceptive and violate
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Section 5(a)(1) of the FTC Act and issued final cease and desist orders with respect to those acts
or practices.
Count IX (by Plaintiff FTC)
Violations of Prior Commission Determinations Known to Defendants
215. At least since receiving the Notice of Penalty Offenses Concerning Money-
Making Opportunities and associated cover letter on October 26, 2021, Defendants have had
actual knowledge that, in connection with the advertising or promotion of money-making
opportunities, making false, misleading, or deceptive earnings claims is an unfair or deceptive
act or practice, unlawful under Section 5(a)(1) of the FTC Act.
216. In numerous instances since receiving the letter and Notice, Defendants
represented, directly or indirectly, expressly or by implication, that drivers in Defendants’ food
delivery program are likely to earn a set hourly rate, such as $26 per hour.
217. In fact, the representations set forth above are false or misleading or were not
substantiated at the time the representations were made.
218. Since at least October 26, 2021, Defendants have engaged in these acts and
practices with the actual knowledge that, in prior litigated decisions, the Commission has
determined that these acts or practices are unfair or deceptive and violate Section 5(a)(1) of the
FTC Act and issued final cease and desist orders, other than consent orders, with respect to those
acts or practices.
* * *
219. Based on the facts and violations of law alleged in this Complaint, Plaintiff
People of the State of Illinois has reason to believe that Defendants are violating the following
laws enforced by the Illinois Attorney General:
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VIOLATIONS OF ILLINOIS STATE LAW
The Illinois Consumer Fraud Act
220. Section 2 of the Consumer Fraud and Deceptive Business Practices Act
(“Consumer Fraud Act”) provides the following:
Unfair methods of competition and unfair or deceptive acts or practices,
including but not limited to the use or employment of any deception fraud,
false pretense, false promise, misrepresentation or the concealment,
suppression or omission of any material fact, with intent that others rely
upon the concealment, suppression or omission of such material fact, or
the use or employment of any practice described in Section 2 of the
‘Uniform Deceptive Trade Practices Act’, approved August, 5, 1965 [815
ILCS 510/2], in the conduct of any trade or commerce are hereby declared
unlawful whether any person has in fact been misled, deceived or
damaged thereby. In construing this section consideration shall be given to
the interpretations of the Federal Trade Commission and the federal courts
relating to Section 5(a) of the Federal Trade Commission Act.
815 ILCS 505/2
221. Section 7 of the Consumer Fraud Act provides:
(a) Whenever the Attorney General has reason to believe that any
person is using, has used, or is about to use any method, act or practice
declared by the Act to be unlawful, and that proceedings would be in the
public interest, he may bring an action in the name of the State against
such person to restrain by preliminary or permanent injunction the use of
such method, act or practice. The Court, in its discretion, may exercise all
powers necessary, including by not limited to: injunction, revocation,
forfeiture or suspension of any license, charger, franchise, certificate or
other evidence of authority of any person to do business in this State;
appointment of a receiver, dissolution of domestic corporations or
association suspension or termination of the right of foreign corporation or
associations to do business in this State; and restitution.
(b) In addition to the remedies provided herein, the Attorney General may
request and this Court may impose a civil penalty in a sum not to exceed $50,000
against any person found by the Court to have engaged in any method, act or
practice declared unlawful under this Act. In the event the court finds the method,
act or practice to have been entered into with the intent to defraud, the court has
the authority to impose a civil penalty in a sum not to exceed $50,000 per
violation.
(c) In addition to any other civil penalty provided in this Section, if a person
is found by the court to have engaged in any method, act, or practice declared
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unlawful under this Act, and the violation was committed against a person 65
years of age or older, the court may impose an additional civil penalty not to
exceed $10,000 for each violation.
815 ILCS 505/7.
222. Section 10 of the Consumer Fraud Act provides, “In any action brought under the
provisions of this Act, the Attorney General is entitled to recover costs for the use of this State.”
815 ILCS 505/10.
Illinois Uniform Deceptive Trade Practices Act
223. Section 2 of the Illinois Uniform Deceptive Trade Practices Act provides, in
relevant part, the following:
A person engages in a deceptive trade practice when, in the course of his
or her business, vocation, or occupation, the person:
***
(2) causes likelihood of confusion or of misunderstanding as the
source sponsorship, approval, or certification of good or services;
(3) causes likelihood of confusion or of misunderstanding as to
affiliation, connection, or association with or certification by another;
***
(5) represents that goods or services have sponsorship, approval,
characteristics, ingredients, uses, benefits, or quantities that they do not
have or that a person has a sponsorship, approval, status, affiliation, or
connection that he or she does not have;
***
(11) makes false or misleading statements of fact concerning the
reasons for, existence of, or amounts of price reductions;
(12) engages in any other conduct which similarly creates a likelihood
of confusion or misunderstanding.
815 ILCS 510/2(a)
(b) In order to prevail in an action under this Act, a plaintiff need not
prove competition between the parties or actual confusion or
misunderstanding.
815 ILCS 510/2(b).
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Count X (by Plaintiff State of Illinois)
Violations of the Illinois Consumer Fraud Act
224. The Illinois Attorney General re-alleges and incorporates by reference each and
every allegation set forth in the foregoing paragraphs.
225. Defendants, in the course of trade or commerce, have in numerous instances
engaged in conduct which constitutes unfair and deceptive acts or practices declared unlawful
under section 2 of the Consumer Fraud Act, 815 ILCS 505/2, by:
A. Misrepresenting directly or indirectly, expressly or by implication, through
advertisements, marketing, and offers for the sale of food delivery services, that Illinois
consumers would pay a set delivery fee in connection with a Grubhub food delivery
order;
B. Failing to disclose or adequately disclose to consumers that additional fees
apply to delivery orders when knowledge of the additional fees would be material to
consumers in deciding to place delivery orders through Grubhub, thereby suppressing or
omitting a material fact with the intent that consumers rely upon that suppression or
omission;
C. Misrepresenting directly or indirectly, expressly or by implication, the true
cost of Grubhub’s food delivery services to Illinois consumers by failing to disclose or
adequately disclose to consumers the additional fees it applies on delivery orders;
D. Misrepresenting directly or indirectly, expressly or by implication, through
advertisements, marketing, and offers for the sale of food delivery services, that Illinois
consumers who purchase Grubhub+ subscriptions will receive free deliveries for food
orders;
E. Failing to disclose or adequately disclose to Illinois consumers all
applicable fees for Grubhub+ delivery orders when the fees would be material to
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consumers in deciding to sign up for and place delivery orders using Grubhub+, thereby
suppressing or omitting a material fact with the intent that consumers rely upon that
suppression or omission;
F. Misrepresenting directly or indirectly, expressly or by implication, the
benefits offered to Illinois consumers by failing to disclose or adequately disclose all
applicable fees for Grubhub+ subscribers’ delivery orders;
G. Denying consumers access to consumers’ Grubhub gift card funds by,
among other methods, canceling the consumers’ orders, blocking consumers from
completing new orders, preventing consumers from transferring gift card balances to
other accounts, and refusing to provide refunds for the withheld gift card funds, which
conduct is unfair, oppressive, offends public policy, and causes substantial injury to
consumers that cannot reasonably be avoided;
H. Misrepresenting directly or indirectly, expressly or by implication, that
Grubhub delivery services share a sponsorship, approval, status, affiliation, or
connection, with Unaffiliated Restaurants;
I. Advertising that drivers are likely to earn an inflated and atypical hourly
compensation rate that is substantially more than the typical hourly compensation rate,
thereby suppressing or omitting a material fact, with the intent that prospective Illinois
Grubhub drivers rely upon that misrepresentation, suppression or omission;
J. Misrepresenting directly or indirectly, expressly or by implication, the
amount a prospective Grubhub driver can expect to earn, by advertising that drivers are
likely to earn an inflated and atypical hourly compensation rate that is substantially more
than the typical hourly compensation rate; and
K. Obstructing and impeding, consumer attempts to cancel recurring charges,
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imposed by Defendants on consumers’ credit or debit cards, or other accounts, which
conduct is unfair, oppressive, offends public policy, and causes substantial injury to
consumers that cannot reasonably be avoided.
Count XI (by Plaintiff State of Illinois)
Violations of the Illinois Uniform Deceptive Trade Practices Act
226. Defendants, in the course of a business, vocation, or occupation, have in
numerous instances engaged in deceptive trade practices in violation of Section 2 of the Illinois
Uniform Deceptive Trade Practices Act, 815 ILCS 510/2, by:
A. Creating Grubhub listings for restaurants and processing consumers’
orders in the guise of those restaurants, without the restaurants’ knowledge or consent,
and causing a likelihood of confusion or misunderstanding among Illinois consumers as
to the source, sponsorship, approval, or certification of the goods or services, in violation
of 815 ILCS 510/2(a)(2).
B. Creating Grubhub listings for restaurants and processing consumers’
orders in the guise of those restaurants, without the restaurants’ knowledge or consent,
causing a likelihood of confusion or misunderstanding among Illinois consumers as to
Grubhub’s affiliation, connection, or association with the unaffiliated restaurants, in
violation of 815 ILCS 510/2(a)(3).
C. Creating Grubhub listings for restaurants and processing consumers’
orders in the guise of those restaurants, without the restaurants’ knowledge or consent,
representing that Grubhub’s delivery services have the sponsorship or approval of
unaffiliated restaurants when, in truth and in fact, they do not, in violation of 815 ILCS
510/2(a)(5).
D. Creating Grubhub listings for restaurants and processing consumers’
orders in the guise of those restaurants, without the restaurants’ knowledge or consent,
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representing that unaffiliated restaurants have an affiliation or connection with Grubhub
when, in truth and in fact, they do not, in violation of 815 ILCS 510/2(a)(5).
E. Advertising that Grubhub+ subscribers will receive free delivery services
when, in truth and in fact, Defendants bait consumers with claims of free delivery while
assessing other fees to cover the cost of delivery, thus making false and misleading
statements of fact concerning the existence and amount of price reductions, in violation
of 815 ILCS 510/2(a)(11).
F. Advertising that Grubhub+ subscribers will receive free delivery services
when, in truth and in fact, Defendants bait consumers with claims of free delivery while
assessing other fees to cover the cost of delivery, thus causing a likelihood of confusion
or misunderstanding among Illinois consumers who hold Grubhub+ subscriptions, in
violation of 815 ILCS 510/2(a)(12).
G. Representing to consumers that they will pay a lesser amount for
Grubhub’s delivery services than the actual amount charged, causing a likelihood of
confusion or misunderstanding in regards to delivery costs among Illinois consumers who
place orders through Grubhub, in violation of 815 ILCS 510/2(a)(12).
H. Failing to disclose or adequately disclose to consumers all additional fees
charged for and applied to their delivery orders, causing a likelihood of confusion or
misunderstanding among Illinois consumers who place orders through Grubhub, in
violation of 815 ILCS 510/2(a)(12).
I. Advertising that drivers are likely to earn an inflated and atypical hourly
compensation rate substantially in excess of the hourly rate earned by a typical Illinois
driver during the advertised time period, causing a likelihood of confusion or
misunderstanding among prospective Illinois Grubhub drivers, in violation of 815 ILCS
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510/2(a)(12).
CONSUMER INJURY
227. Consumers are suffering, have suffered, and will continue to suffer substantial
injury as a result of Defendants’ violations of the FTC Act, ROSCA, the Impersonation Rule, the
Illinois Consumer Fraud Act, and the Uniform Deceptive Trade Practices Act. Absent injunctive
relief by this Court, Defendants are likely to continue to injure consumers and harm the public
interest.
PRAYER FOR RELIEF
Wherefore, the FTC and the State of Illinois request that the Court:
A. Enter a permanent injunction to prevent future violations of the FTC Act,
ROSCA, the Impersonation Rule, the Illinois Consumer Fraud Act, and the Illinois Uniform
Deceptive Trade Practices Act;
B. Award monetary and other relief within the Court’s power to grant;
C. Award such relief as the Court finds necessary to redress injury to consumers
resulting from Defendants’ violations of the Illinois Consumer Fraud Act and the Illinois
Uniform Deceptive Trade Practices Act, including, but not limited to, rescission or reformation
of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies;
D. Require Defendants to pay a civil penalty in the amount of $50,000 for each
deceptive and unfair act or practice done in violation of the Consumer Fraud Act and an
additional penalty of $50,000 for each violation the Court finds that Defendants committed with
the intent to defraud, pursuant to 815 ILCS 505/7(b);
E. Require Defendants to pay an additional civil penalty of $10,000 for each
violation of the Illinois Consumer Fraud Act found to have been committed against a senior
citizen, pursuant to 815 ILCS 505/7(c);
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Thomas.James@ilag.gov [email, James]
Wilton.Person@ilag.gov [email, Person]
William.Wingo@ilag.gov [email, Wingo]
(312) 814-2218 [phone, Grzeskiewicz]
(773) 590-7944 [phone, James]
(224) 252-6458 [phone, Person]
(773) 758-4569 [phone, Wingo]
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