City Hall sues Grubhub and DoorDash for deceptive practices

The city of Chicago is suing Grubhub and DoorDash, accusing the food-delivery platforms of engaging in “predatory tactics” for years that hurt restaurants and mislead consumers.

It’s not the first time a municipality has sued a meal delivery company, but “what’s different about the city’s actions is that it addresses a wide range of misconduct by the meal delivery companies, encompassing both restaurant- and consumer-facing misconduct,” said Kristen Cabanban, a spokeswoman for the city’s Department of Law.

The lawsuits were both filed Friday in Cook County Circuit 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,” Mayor Lori Lightfoot said in a statement.

“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.”

Among other things, the city alleges Chicago-based Grubhub and DoorDash advertise order and delivery services from unaffiliated restaurants without their consent.

“These unauthorized listings misleadingly convey that Grubhub and the restaurant are working together,” according to the suit filed against Grubhub. “They also leave restaurants holding the bag on the customer service problems that predictably result.”

Both companies also lure consumers into a “bait-and-switch” with “deceptively small delivery fees upfront, only to charge misleading fees at the end of the transaction. This increases the total cost of delivery by as much as six times the amount initially advertised,” according to the Law Department.

The lawsuits seek, among other things, “greater transparency” from the companies and civil penalties.

The City Council in November capped delivery fees at 10% and limited “any combination of fees, commissions or costs” to 15% of orders. It also barred the platforms from charging more for an item than a restaurant does. The limits expired 60 days after the city allowed indoor dining at 40% capacity.

“We are deeply disappointed by Mayor Lightfoot’s decision to file this baseless lawsuit,” Grant Klinzman, a spokesman for Grubhub, said in a statement. “Every single allegation is categorically wrong, and we will aggressively defend our business practices. We look forward to responding in court and are confident we will prevail.”

Grubhub says listing “non-partner” restaurants on the company’s website is “consistent with industry practice,” adding those restaurants need only send an email to be removed from the website. The company also strongly disputes it has misrepresented its fees.

A representative from DoorDash couldn’t be reached for comment Friday.

The lawsuits stem from a joint investigation by the Law Department and the city Department of Business Affairs and Consumer Protection.

“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,” acting BACP Commissioner Kenneth Meyer said in a statement.