Grubhub begins distributing $23.8 million FTC settlement to drivers and customers
The Federal Trade Commission and Illinois Attorney General’s lawsuit has resulted in payments via mail and PayPal, marking the latest in a series of regulatory actions against the company.
Grubhub has commenced the distribution of $23.8 million to more than 640,000 drivers and customers as part of a settlement with the Federal Trade Commission (FTC). The payments, delivered through mailed cheques and PayPal transfers, resolve allegations that the food delivery company engaged in deceptive business practices, including misleading workers about earnings and listing restaurants without consent.
The payout follows a lawsuit filed in December 2024 by the FTC and the Illinois Attorney General. The complaint accused Grubhub of making misleading claims regarding potential driver income, restricting customer access to their accounts and funds, and adding up to 325,000 unaffiliated restaurants to its platform to inflate its perceived size. The FTC alleged that the company sometimes refused to remove restaurants that requested deletion, instead attempting to convert them into paid partnerships.
Under the terms of the settlement, Grubhub is required to implement several operational changes. The company must ensure accuracy in advertising driver earnings, provide customers with a mechanism to challenge account restrictions, and obtain explicit consent from restaurants before listing them on the platform. Recipients of the settlement funds will receive varying amounts based on their activity levels, though the specific monetary value for individual users has not been disclosed.
This distribution occurs shortly after a separate $25 million settlement was approved by a federal judge for approximately 60,000 Grubhub delivery drivers in California. The dual settlements highlight the intensifying regulatory scrutiny facing the food delivery sector, with other major platforms such as DoorDash and Uber Eats also facing legal challenges and criticism regarding driver compensation and customer charges.
The FTC’s action underscores ongoing concerns about transparency and fair dealing within the gig economy. By mandating changes to how Grubhub manages restaurant partnerships and communicates earnings potential, the settlement aims to restore trust and ensure compliance with consumer protection standards.
