The City of Chicago sues Food Delivery Platforms Grubhub and DoorDash

2021-09-08 by JamesD
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Grubhub and DoorDash are food delivery platforms under the scrutiny of investigators in Chicago for a year over several violations. Now that the investigation has been concluded, the delivery platforms have been slammed with lawsuits following findings that reveal they employed strategies that went against existing laws.

The lawsuit by the city of Chicago is an unprecedented assault on the operation of food delivery operators. It was announced on Friday, along with some allegations of unhealthy tactics employed by the organizations concerning multiple violations of laws governing businesses and consumer rights in the region.

Chicago officials criticize the companies for extorting high charges from consumers and restaurants in the city during the COVID-19 pandemic when their services became essential during city-wide lockdowns. They’re also accused of business tactics that are deceptive and designed to profit from the hardship caused by the pandemic.

In response to the lawsuits filed against them, Grubhub and DoorDash claimed the lawsuits and allegations of unfair play and tactics are unproven and therefore have no basis in court. They did this even though they’ve been under the scrutiny of government investigators in the past. They also need to be worried about the approach of this lawsuit from the city, which, in contrast to previous investigations, targets several aspects of their business activities and operations.

Delivery companies in San Francisco were previously accused of neglecting laws in California by their practice of calling drivers contractors. Chicago isn’t the first state in the US to have taken DoorDash to court as the food delivery company reached an agreement with Washington D.C. in 2019 after a lawsuit in which the company was accused of providing misleading information to customers regarding their tip-policy for drivers.

Grubhub isn’t new to lawsuits either.  The attorney general’s office in Massachusetts slammed the company with one only a couple of months ago, alleging the company forced users and customers to pay exorbitant charges during the COVID-19 pandemic. The concerns expressed by the Massachusetts attorney general’s office are in line with the findings of Chicago investigators, as they both allege high fees during the pandemic and unfair business practices.

The city of Chicago also claims Grubhub and DoorDash sometimes promote meals without the consent of restaurants. This practice affects the restaurants as customers lose trust in their brands when they are delivered meals that differ from what was advertised.

Investigators also found the delivery companies to have charged food prices that were significantly higher than what restaurants themselves sell their food for according to their own menus. They also reportedly failed to disclose total fees to customers, a practice that allegedly allowed them to charge customers much more in the end for food delivered to them.

GrubHub and DoorDash are expected to pay significant amounts in damages after the proceedings in Chicago, though no amount has been announced. The city of Chicago wants the companies to pay multiple fines, one for every time they violated existing city regulations.