Chicago sues DoorDash and Grubhub for ‘unfair and deceptive’ practices

 The city of Chicago has filed a lawsuit against food delivery services DoorDash and Grubhub, alleging that they used fraudulent and unethical practices to harm establishments during the coronavirus outbreak. The services are accused of a variety of wrongdoings in the two lawsuits, including illegally advertising delivery services for restaurants without their permission, charging clients misleading fees, and concealing the expenditures they added to a meal.

“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,” said Chicago Mayor Lori Lightfoot, who filed the complaints with Acting Business Affairs and Consumer Protection Commissioner Kenneth Meyer and corpora.

“IT IS DEEPLY CONCERNING AND UNFORTUNATE THAT THESE COMPANIES BROKE THE LAW DURING THESE INCREDIBLY DIFFICULT TIMES”

The lawsuits are based on the Chicago Municipal Code and appear to be the result of a partnership between the BACP and the City of Chicago Law Department. However, they recur in other disputes and public conflicts. In Grubhub's case, for example, the firm alleges that its widely panned "Supper for Support" deal "was so deceptive that it was obliged to release nationwide corrective remarks." It singles out Grubhub's practice of promoting phone numbers that drive callers to restaurants while discreetly adding their own costs, as well as creating "imposter" copies of restaurant websites, among many other concerns.

The allegations were disputed by Grubhub. “We are appalled by Mayor Lightfoot's choice to pursue this frivolous lawsuit. Every claim is completely false, and we will vigorously defend our business practices. We are excited to reply in court and are certain that we will succeed,” a spokeswoman told The Verge. According to Grubhub, phone orders were halted on August 23rd, while users can still place a Grubhub order over the phone with a professional, and the websites in question are no longer available.

This is the government's second lawsuit against Grubhub in as many months. Massachusetts Attorney General Maura Healey sued it in July for allegedly breaching a local 15 percent cap on restaurant costs — an allegation that appears in the Chicago case as well.

Similarly, DoorDash is accused of avoiding Chicago's 15% cap by charging a $1.50 "Chicago Tax" that "misleadingly conveyed to consumers that the city was imposing this fee and receiving the money."

The lawsuit also takes aim at DoorDash's tipping policy, which sought "tips" in order to pay drivers' existing salaries rather than passing them on as a bonus. (In 2019, DoorDash declared that it would amend its policy.) “DoorDash misled Chicago customers into believing that they were using the DoorDash Platform's 'tip' feature to augment the revenue of the driver who delivered their food, in addition to the base pay offered by DoorDash. Instead, the lawsuit claims, DoorDash “largely exploited the customer's ‘tip' to fund its own agreed-upon payment to the driver.”

The suit's grounds were likewise disputed by DoorDash. “This case is without merit. It's a waste of public dollars, and Chicago residents should be upset. “Throughout the pandemic, DoorDash has stood with the City of Chicago, cancelling restaurant fees, providing $500,000 indirect subsidies, generating excellent earning opportunities, and delivering food and other supplies to areas in need,” a spokesman told The Verge in a statement. It paid $2.5 million to resolve a lawsuit in Washington, DC over their tipping policy; the deal did not involve an acknowledgement of guilt.