The price of a half turkey sandwich on rye from Langer's Delicatessen-Restaurant in Los Angeles, purchased through the delivery app Grubhub, starts around $17.
But when you pay, the costs increase. With additional fees and sales taxes, the cost of a sandwich delivery can exceed $26.00. More tip.
Los Angeles County says it amounts to an illegal “bait and switch.”
In a lawsuit filed Wednesday against Grubhub, county attorneys argue that the food delivery company has repeatedly violated a state law that prohibits false advertising by promoting meals at a cheaper price than what customers see on the website. pay.
“Grubhub has built this vast market through practices that deceive consumers and restaurants and pressure the company's delivery drivers,” the lawsuit says. “Multiple aspects of Grubhub's business, and every food delivery transaction, are rife with deception.”
A Grubhub spokesperson said in a statement that the company plans to “aggressively defend” itself in court.
“We have sought to engage in constructive dialogue with the Los Angeles County District Attorney's Office to explain our business and identify areas for improvement,” a company spokesperson wrote. “We are disappointed that they have moved forward with this lawsuit because our practices have always complied with applicable law and, in any case, many of the allegations are incorrect or have been discontinued.”
The lawsuit refers to a Grubhub website with a sign that says customers can “order online for free” at nearby Los Angeles restaurants. In reality, the lawsuit says, they can't.
Grubhub said it is working to remove the language “from all existing materials.”
“This lawsuit sends a clear message: Los Angeles County will not tolerate businesses that mislead consumers, take advantage of restaurants, and exploit drivers who work hard to provide valuable service,” said Supervisor Lindsey Horvath, president of the board, in a statement. .
It's the latest government measure aimed at stopping companies from hitting consumers with surprise charges. A new state law will go into effect this summer banning last-minute “junk fees” at a long list of companies, including delivery apps. Lawyer. Gen. Rob Bonta, who co-sponsored the measure, has promised that “the price Californians see will be the price they pay.”
The attorney general's office has said that once the law goes into effect, delivery apps cannot add miscellaneous fees at the end of the transaction.
The county's lawsuit argues that the status quo harms not only Grubhub customers, but also the drivers and restaurants that serve them.
According to the lawsuit, restaurants that signed up for Grubhub were not adequately warned that they would have to refund money to dissatisfied customers, even if the restaurants did not believe they had made a mistake with the order. Restaurants are also at a disadvantage if they do not pay the company additional marketing fees, the county alleged.
Grubhub gives more prominence in searches to restaurants that pay more in marketing fees, although most customers probably don't realize this, the lawsuit alleges. Instead, customers may believe that the restaurants they see higher in the search rankings are the closest or most popular.
“These practices cause financial harm to Los Angeles County residents, restaurants and workers and are unacceptable as many of them struggle to make ends meet,” Rafael Carbajal, director of the Department of Business and Consumer Affairs, said in a statement. County.
grubhub was attacked of its California delivery drivers in 2020 after the company implemented a new charge, called a driver benefit fee, to help cover costs stemming from Proposition 22, a voter-approved ballot measure that guaranteed delivery drivers who registered a certain number of hours. a health care stipend, among other benefits.
As part of the launch, the company did not tip at all. Drivers said their income was drastically reduced as a result.
The lawsuit alleges that Grubhub's way of explaining the driver benefit rate continues to discourage customers from tipping.
Grubhub explains that the fee to consumers helps ensure “a minimum wage and health care benefits for our drivers so they do not have to rely on tips,” the lawsuit says. In reality, many drivers do not qualify for the stipend and rely entirely on tips, the county alleges.
Grubhub said the company has worked to make it easier for restaurants to challenge refunds and plans to clarify the benefits drivers receive as a result of Proposition 22. It also said the marketing fees only affect searches that customers see in “certain circumstances.” limited”.
In 2022, Grubhub established a similar lawsuit with Washington, D.C., for $3.5 million after the district attorney general accused the company of manipulating customers with “hidden fees.” Under the settlement, Washington received $800,000 and $2.7 million returned to Grubhub customer accounts.
