⚖️ Grubhub Fined $25M

Author

Liam Gill
January 04, 2025

In partnership with

Understanding the Grubhub Settlement

Grubhub’s $25 million settlement with the FTC and Illinois Attorney General stems from allegations of deceptive practices affecting customers, drivers, and restaurants. The lawsuit claims Grubhub misled customers about delivery fees, concealed additional costs, and overstated driver earnings in advertisements. Furthermore, it listed 325,000 unaffiliated restaurants without their consent, causing reputational and operational harm to those businesses. Although Grubhub denies the allegations, the settlement requires the company to cease these practices, signaling a broader regulatory crackdown on deceptive behavior in the gig economy.

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Implications for Tech Startups

This settlement is a cautionary tale for startups, especially those in platform-based businesses. Transparency is critical in pricing, advertising, and partner relationships. For startups operating in the gig economy, misleading earnings claims for contractors or onboarding partners without consent could attract regulatory scrutiny. Additionally, with regulatory agencies increasingly focused on protecting consumers and small businesses, startups must ensure their practices comply with evolving standards to avoid similar penalties.

Action Steps for Founders

Startups should conduct regular legal and compliance audits to identify potential vulnerabilities in their pricing, marketing, and partner onboarding processes. Avoid ambiguous or hidden fees and ensure clear, upfront communication with customers and contractors. If your platform includes third-party businesses, obtain explicit consent before listing them. Building trust through transparency not only reduces legal risks but also strengthens relationships with users and partners, providing a competitive edge in a regulatory landscape that is increasingly prioritizing fairness and accountability.

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