Grubhub, one of the country’s largest food delivery platforms, has agreed to pay $25 million to settle allegations from the Federal Trade Commission and the Illinois Attorney General that it engaged in deceptive and unfair practices targeting restaurants, delivery drivers and consumers. The settlement, announced on Friday, will include substantial changes to Grubhub’s business practices as part of a broader crackdown on “junk fees.”
The charges stem from a multi-year investigation that revealed a pattern of misconduct by Grubhub. According to the FTC, the company misled diners about delivery costs, blocked users from accessing their accounts and funds, falsely advertised earnings to potential delivery drivers and listed restaurants on its platform without their consent.
These practices, regulators said, were aimed at driving growth and market dominance at the expense of transparency and fairness.
“Our investigation found that Grubhub tricked its customers, deceived its drivers and unfairly damaged the reputation and revenues of restaurants that did not partner with Grubhub — all in order to drive scale and accelerate growth,” said FTC Chair Lina M. Khan. “Today’s action holds Grubhub to account, putting an end to these illegal practices and securing nearly $25 million for the people cheated by Grubhub’s tactics. There is no ‘gig platform’ exemption to the laws on the books.”
Illinois Attorney General Kwame Raoul, whose office collaborated with the FTC on the investigation, echoed these sentiments. “This settlement is the culmination of a multi-year investigation into deceptive and illegal business practices perpetrated by Grubhub,” he said. “I remain committed to holding businesses like Grubhub accountable for their deceptive business practices.”
One of the central allegations in the case involved Grubhub’s practice of adding unaffiliated restaurants to its platform without their permission. By listing restaurants without consent, Grubhub artificially inflated the number of options available to diners, a strategy regulators say created a misleading perception of the platform’s size and reliability. The complaint notes that this practice harmed both diners and restaurants; customers often encountered outdated menus and chaotic ordering systems, while restaurants were left to manage frustrated diners and unpaid bills. In some cases, Grubhub drivers used company credit cards that were declined, leaving restaurants without compensation for prepared meals.
The complaint also alleges that, for years, Grubhub “hidden the true cost of its delivery services — a tactic that a former executive called a ‘pricing shell game.’”
“Grubhub has advertised that diners will pay a single, low-cost amount for Grubhub’s services in connection with a delivery order,” the FTC wrote in a statement. “In reality, Grubhub tacks on junk fees, resulting in a final price that is often more than double what it originally advertised. These surprise fees are often labeled as ‘service fees’ or ‘small order fees,’ but they are simply delivery fees in disguise.”
Regulators also took issue with Grubhub’s handling of user accounts. The complaint details how the company blocked access to accounts with significant gift card balances — often without explanation or recourse. These blocks disproportionately affected vulnerable individuals, including new parents and those facing health challenges who had received gift card funds from friends and family.
“According to the complaint, diners were left with no ability to regain access to their accounts or money,” the statement from the FTC continued. “Diners who complained to the company were not told their account was blocked, or if they were told, they were not given any meaningful way to contest the block, and the complaint notes that in one month alone, 97% of locked accounts were never unlocked.”
Under the terms of the proposed settlement, Grubhub will be required to implement sweeping changes to its operations. The company must disclose the true cost of delivery upfront, eliminate hidden fees and provide a straightforward cancellation process for Grubhub+ subscribers. It is also prohibited from listing restaurants on its platform without their consent and must ensure that all claims about driver earnings are accurate and substantiated.
Additionally, Grubhub must notify users when their accounts are blocked and provide a clear process for appealing such decisions.
While the $25 million settlement is a fraction of the $140 million judgment initially sought, regulators noted that nearly all of the funds will be used to compensate consumers harmed by Grubhub’s practices. The company’s inability to pay the full amount led to a suspension of the larger judgment, but the FTC warned that misrepresenting its financial status could trigger full payment.
In a statement, Grubhub contested the allegations, but said settling was the best way forward for the companies.
“At Grubhub, we're committed to transparency so that every single day diners, restaurants and drivers can make well-informed choices to do business with us,” a Grubhub spokesperson told National Restaurant News. “While we categorically deny the allegations made by the FTC, many of which are wrong, misleading or no longer applicable to our business, we believe settling this matter is in the best interest of Grubhub and allows us to move forward."
