City of Chicago sues Grubhub and DoorDash for deceptive tactics

On Friday, August 27, 2021, Mayor Lightfoot, Acting Business Affairs and Consumer Protection (BACP) Commissioner Ken Meyer, and Corporation Counsel Celia Meza announced that the City of Chicago has filed two lawsuits against Grubhub and DoorDash.

These lawsuits are the result of a collaborative investigation led by BACP and the City’s Law Department. They are the first comprehensive law enforcement actions against meal delivery companies in the United States. The City filed separate lawsuits against the companies in Cook County Superior Court.

“As we stared down a global pandemic that shuttered businesses and drove people indoors, the defendants’ meal delivery service apps became a primary way for people to feed themselves and their families, as well as support local restaurants,” said Mayor Lightfoot. “It is deeply concerning and unfortunate that these companies broke the law during these incredibly difficult times, using unfair and deceptive tactics to take advantage of restaurants and consumers who were struggling to stay afloat.” 

Both companies are accused of advertising order and delivery services from unaffiliated restaurants without the restaurants’ consent, and hiding the fact that menu prices on their platforms are often higher than if customers ordered directly from the restaurants.

The City further alleged that the companies lured customers into a “bait and switch” by charging customers delivery fees that are up to six times as much as originally advertised.

Grubhub is accused of publishing deceptive telephone numbers and creating “imposter websites” for restaurants. 

The City of Chicago also claims that Grubhub violated an emergency cap of restaurant commissions, which were set at a maximum of 15%. 

City officials said DoorDash misled customers into thinking they were tipping their delivery drivers and riders, but only used the “tip” to subsidize payments to the delivery people.

Customers also were misled about a “Chicago Fee,” which went to DoorDash rather than the City, according to the lawsuit. Chicago maintains that DoorDash tried to make it seem like the “Chicago Fee” was being administered by the City, and even included a customer’s tweet from January in the lawsuit on page 29 of the 93 page complaint.

The lawsuit states, “DoorDash’s response to the November 2020 Emergency Fee Cap was to invent and impose a new “Chicago Fee” of $1.50 on every DoorDash order in Chicago. Calling this surcharge a “Chicago Fee” misleadingly conveyed to consumers that the City was imposing this fee and receiving the money. The City was doing neither”

After detailing the complaints, the Mayor’s office continues by saying that at the height of the 2020 lockdown, approximately half of Chicago’s 7,500 restaurants had closed either temporarily or permanently. The Federal Reserve estimated that approximately 44,000 restaurant workers in the Chicago area lost their jobs in 2020.  Meanwhile, sales for meal delivery service platforms have soared since pandemic-related health restrictions forced restaurants to close or severely limit indoor dining.  From 2019-2020, year-over-year total orders placed with meal delivery service platforms have more than tripled nationally – from 263 million to 816 million.  As Defendants’ business surged, their predatory practices persisted. 

“We discovered that Grubhub and DoorDash have been engaging in deceptive and misleading business practices that harm consumers and exploit restaurants. These practices continued unabated during the pandemic when restaurants were struggling to survive,” said Acting BACP Commissioner Kenneth Meyer.  “We heard from the hospitality industry and Chicago’s consumers about these unfair practices and this action demonstrates we will hold non-complying businesses accountable.”

DoorDash published their own statement refuting the City’s claims, saying: “This lawsuit is without merit and a waste of taxpayer resources. Chicagoans should be outraged.”

The City of Chicago said both apps were adding restaurants to their platform without first asking them. “That is false,” DoorDash said in the statement.

But DoorDash also went on to say that restaurants “previously listed on our platform without first having signed a contract can notify us that they no longer wish to be listed on DoorDash, and we honor such requests.”

The statement also included a dig against the Mayor personally for banning indoor dining, during a highly infectious pandemic, “The truth is, DoorDash has been a diligent and supportive community partner, uplifting merchants in Chicago and communicating regularly with the City to help rebuild the local economy. From reducing our commissions at the start of the pandemic to donating $500,000 in grant money to help restaurants survive the winter when indoor dining was banned by the Lightfoot administration — we have worked hard to ensure that local businesses could continue to thrive despite the challenges. In addition, our five-year, $200M Main Street Strong Pledge is one of many relief and support initiatives we’ve rolled out over the past year to help independent restaurants navigate the difficulties of operating during a pandemic.”

Have you been taken advantage of by unscrupulous 3rd party food delivery apps? The City of Chicago wants to know! If any Chicago restaurant or consumer wishes to inform the City about their experience with meal delivery companies, they can do so by emailing mealdelivery@cityofchicago.org.   

The City of Chicago is also conducting a survey of restaurants to gauge their experiences with delivery services. Click here to take the survey.


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