Grubhub Agrees To Pay $7.1M To Restaurants On False Partnership Advertisement Claims: Report

Grubhub will reportedly pay $7.1 million to settle a class action lawsuit alleging it falsely advertised partnerships with thousands of restaurants.

According to a Reuters report, on Tuesday, the restaurants filed a preliminary settlement in the federal court in Chicago. The report added that the settlement requires a judge’s approval.

Reuters noted that the plaintiffs’ lawyers said in a court filing that the settlement class includes about 387,000 businesses. The filing stated that the online food delivery platform Grubhub advertised without the consent of these businesses that they participated in its delivery services.

The report said that Grubhub listed these restaurants on its website and affiliated platforms without formal agreements, prompting allegations that the company damaged the reputation of these businesses. The restaurants claimed this unauthorized inclusion led to consumer confusion and a decline in sales.

Grubhub had agreed to pay $25 million last year to settle another lawsuit brought by the Federal Trade Commission and Illinois' attorney general, which claimed that the online food delivery firm listed restaurants without their consent. The lawsuit alleged that the company misled customers about order fees and also duped drivers about pay.

Reuters said Grubhub has denied any wrongdoing in settling both cases. The report, citing a statement from Grubhub, noted the claims in the lawsuit "have not been part of our business model for some time." According to the company, the lawsuit settlement will allow Grubhub to focus on its business operations.

The report noted that the settlement applies to the period from early 2019 through April 2024. Eligible class members will receive an initial payment of $50, with additional compensation calculated based on how long their business appeared on Grubhub and its affiliated platforms, Reuters said. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: Travis Kelce Joins American Eagle After Sydney Sweeney, Retail Investors Call It ‘Solid Culture Play’