HARRISBURG, Pa. (WHTM) — Pennsylvania Attorney General Josh Shapiro announced on Monday that a settlement was made with Grubhub regarding price transparency in the app.
An investigation conducted by the Office of the Attorney General focused on price discrepancies between the app and ordering at the actual restaurant. When ordering food from the Grubhub app, customers were sometimes charged higher prices for the items they ordered than they would be if they ordered from the restaurant directly.
As part of the agreement, Grubhub will be paying $125,000 in donations to a number of food banks throughout Pennsylvania.
“Online food delivery platforms can be very convenient, but consumers deserve transparency so they can make informed decisions about whether to place an order. I’m pleased that Grubhub agreed to make their pricing more straightforward,” said Attorney General Shapiro. “This is another step toward delivering a marketplace that is more fair for restaurants and consumers — and I call on all food-delivery platform companies to provide this same transparency as soon as possible.”
Attorney General Josh Shapiro requested that Grubhub add in additional disclosures on their app and website, explaining that prices on the platform might be higher than the restaurant. Grubhub will add these disclosures to their menu pages and the checkout page.
The investigation also found that Grubhub was using routing numbers, microsites (separate websites that house the restaurant’s menu) and undisclosed partnerships with third-party websites, such as Yelp or menupages.com. The misrepresentation undermined consumers’ ability to shop around and compare prices.
It was also found that a consumer calling a Grubhub routing phone number who wanted to order from the restaurant directly may have believed they were calling the restaurant, however, they would reach a Grubhub customer service representative and may have paid higher prices and fees.
AG Shapiro also wants consumers to be aware of the following:
- Items are often more expensive in the app – You will be charged a higher price for items in delivery apps than you would if you purchased the item in person. These charges are in addition to the delivery app fees.
- Fees are charged by delivery apps – Fees will be charged while ordering items for delivery in the delivery apps. These fees include service fees, delivery charges, and a tip that the consumer allocates for the delivery driver. There may be other fees depending on the order, such as fees for heavy orders, small orders, and “surge” fees for items in high demand.
- Restaurants pay commissions to the delivery apps – Restaurants may pay a percentage of each order in commission to the delivery apps, in addition to the fees that customers pay. Consumers who want all of their payment to be paid to the restaurant should order directly from the restaurant.
Grubhub’s $125,000 payment will be distributed in equal amounts to the following pre-screened non-profit entities: Feeding Pennsylvania, the Central Pennsylvania Food Bank, the Greater Pittsburgh Community Food Bank, and Philabundance.
This investigation and settlement were conducted and obtained by Chief Deputy Attorney General and Director of the Bureau of Consumer Protection Sarah Frasch as well as Deputy Attorney General Catherine Twigg and Senior Civil Investigator Jessica Nelson.