Companies like DoorDash and GrubHub are taking a bite out of restaurant profits.
Now, several lawsuits are in motion that could lead to improved transparency on those apps.
In the most recent case filed in March, D.C. Attorney General Karl Racine accuses GrubHub of listing certain fee' as “taxes” in order to sneak them past customers.
Racine also says the company listed restaurants without permission, a practice that increases the chances of an incorrect order.
“Attorney General Racine has been pretty active in pursuing lawsuits when he feels that consumers are being duped,” Chip Magid at Dorsey & Whitney LLP said.
“As alleged, it fits the pattern of the kind of case that he would pursue, allegedly deceiving the public, adding hidden charges, false websites and the like,” Magid continued.
In its response, a GrubHub spokesperson said the company is “disappointed” by the lawsuit.
The company says it has already corrected some of the issues from the complaint
GrubHub stopped listing non-partner restaurants in D.C. It also claims to list its fees more clearly.
“If the AG's office prevails, then I think that's gonna really set in motion a lot of copycat cases against others in the intermediary industry, like GrubHub, as well as those in the travel and leisure industry and others who, maybe don't do exactly this, but could be accused of something somewhat similar,” said Magid.
The lawsuits connected to the delivery industry are moving slowly through the court system.
In the meantime, GrubHub and its rivals are still listing “non-partner restaurants” in most cities, since only a few cities have banned the practice.
