Chicago Sues DoorDash and Grubhub; Lawsuits Allege Shady Business Practices During Pandemic

The City of Chicago has filed lawsuits against two meal delivery companies for adopting deceptive business practices. The lawsuits have been filed against Grubhub and DoorDash. They alleged that both the companies overcharging city’s restaurants as well as their customers. Grubhub and DoorDash have been also accused of adopting other shady practices during the pandemic. They adopted these practices at the time when delivery services became essential to the industry to curb the spread of Covid-19. “They were involved in deceptive and shady business practices during the pandemic. Those practices not only mislead customers but also harmed restaurants,” Chicago said in a statement. The lawsuits have been brought by Kenneth Meyer, acting Business Affairs and Consumer Protection Commissioner of one of the largest cities of the United States. Commenting on the lawsuits, Mayor Lori Lightfoot said that it’s unfortunate that these companies adopted unfair means during these incredibly difficult times. “It is deeply concerning and unfortunate that Grubhub and DoorDash broke the law at one of the most difficult times in decades. They adopted unfair means to cheat restaurants. That too at a time when they were struggling to stay afloat. Not only this, these companies even cheated consumers,” Lightfoot said in a statement.

However, representatives of both companies have termed these allegations made in lawsuits as baseless. The lawsuits have been filed in Cook County Circuit Court. This is not the first time when delivery companies are the target of legal authorities. These companies have faced similar lawsuits in other cities states. But those lawsuits targeted specific policies of these companies. However, lawsuits filed by the City of Chicago pointed out several elements of the companies’ operations. The district attorney of San Francisco accused that food delivery companies violated California law as they classified drivers as contractors. Washington, D.C. had alleged in 2019 that DoorDash misleads its customers about how much delivery drivers received in tips. However, a settlement was reached later. A lawsuit was filed against Grubhub by the Massachusetts attorney in July this year. The lawsuit accused the company of charging restaurants high fees during the coronavirus pandemic. It must be noted that the state had capped fees for delivery companies for much of 2020. This time, the lawsuits have pointed out misconduct specific to each company. In the case of Grubhub, the company has been accused of websites of restaurants. According to a release issued by the city, “these companies did this to either charge ‘routing’ fees or to siphon traffic from legit website.”

On the other hand, DoorDash has been accused of pocketing tips that customers gave to delivery drivers of restaurants. The company is also accused of imposing a ‘Chicago fee.’ The company misled customers by marketing the ‘fee’ as a donation to the city. However, it went directly to the company. The lawsuits also alleged that delivery companies advertise delivery services for restaurants without their consent. This has a negative effect on the reputation of businesses when customers are not happy with the service provided or the cost of the food. City investigators also found during the investigation that DoorDash and Grubhub charged higher prices for food items than actually set by restaurants. They even charged more in total fees than initially disclosed to customers. Terming it ‘baseless,’ a DoorDash spokesperson said the lawsuit will cost taxpayers and deliver nothing. “Chicagoans should be outraged. This is a wastage of taxpayers’ money. We stood with the city throughout the coronavirus pandemic. We waived fees for restaurants. Not only this, but DoorDash also provided direct grants of USD 500,000. Strong earning opportunities were created for restaurants in the city.” DoorDash settled a lawsuit with Washington, DC last year. The lawsuit was regarding its tipping practices. It paid USD 2.5 million to settle this. Grubhub too rejected all these allegations. The company said that it will aggressively defend its business practices. “Every single allegation made in the lawsuit is wrong. We are deeply disappointed. We will respond in court and are confident that we will prevail,” the company said. Lawsuits sought a fine for each violation. But did not specifically mention the amount. Chicago also wants an order to stop these companies from violating the city’s codes.