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Chicago and New York City Crack Down on Third-Party Delivery Giants
Several lawsuits accuse DoorDash and GrubHub of “deceitful” and “unfair” business practices, particularly during the pandemic.
The city of Chicago recently announced that it is suing DoorDash and GrubHub, claiming the companies “deceived consumers and shortchanged restaurants already reeling from the pandemic shutdown.”
In an August 27th press release, the city accused both DoorDash and GrubHub of the following:
- Advertising order and delivery services from unaffiliated restaurants without their consent, leaving restaurants to repair reputational damage and resolve consumer complaints caused by Defendants.
- Luring 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.
- Hiding that menu prices on their platforms are often significantly higher than the prices available if ordering directly from the restaurant.
"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 Mayor Lori E. Lightfoot in the release.
Other reported misconducts are specific to each company. DoorDash, for example, is specifically accused of “imposing a misleading ‘Chicago Fee’ of $1.50 on every order in the City, deceptively implying the fee was required by, or paid to, Chicago—when in fact DoorDash was the sole beneficiary.”
In response, DoorDash published a statement, claiming “This lawsuit is without merit and a waste of taxpayer resources. Chicagoans should be outraged.”
These lawsuits come just a day after New York City permanently implemented a cap on third-party delivery fees in an effort to shield restaurants from rising delivery fees.
“The City Council has taken a critically important step toward protecting New York City eateries by passing legislation to permanently cap the outrageous third-party delivery fees charged by these billion dollar corporations, which follows a package of legislation passed last month regulating these platforms’ predatory practices,” said Andrew Rigie, NYC Hospitality Alliance executive director, in a statement.
The bill is currently pending the signature of Mayor Bill de Blasio, who has 30 days to sign the documents.
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