Chicago Claims DoorDash and Seriously Misleading Payment Customers
The pandemic has a benefits of food delivery applications, as many restaurants are closing their restaurants while restaurants are avoiding going out. The lawsuits filed by the city of Chicago claim that by Dash and Grubhub exploited the pandemic to mislead restaurants and eateries, charge unfairly high commissions, and bypass emergency provisions that have fueled the struggling hospitality industry. The apps use “unfair and deceptive tactics,” mayor Lori Lightfoot said in a press release.
The separate lawsuit has drawn several lawsuits against the companies, but the lawsuit centers on alleged fraudulent acts in the early stages of the pandemic when lockdowns closed several restaurants.
The suits say companies are taking steps to avoid the city’s emergency fee cap, which limits commissions on most orders to 15 percent. The suits claim that Grubhub continued to collect fees greater than 15 percent, while DoorDash imposed an arbitrary “Chicago fee” to increase its revenue.
In separate statements, the companies called the suits “baseless” and said they planned to fight them in court.
Grubhub’s lawsuit alleges the company used the pandemic to sell the “save local restaurants” campaign that ultimately hurt struggling restaurants. The “Dinner for Support” promotion offers $ 10 on orders from local restaurants of $ 30 or more; the suit described it as a “loss of the deal for restaurants.”
$ 10 is deducted from the fee, but restaurants still have to pay a commission of up to 30 percent of the total order price. the campaign began a few months before Chicago failed to pay the commission. As a result, the suit said, an order of $ 30 would get only $ 11 in revenue for a restaurant. The suit said that if diners knew what was going on on platforms, as opposed to restaurants, they wouldn’t use it to order.
A Grubhub spokesperson said the participating restaurants agreed to participate in the promotion and knew the terms before they signed. Participants in the restaurants were told they would be promoted as part of the campaign; Restaurants that refuse will lack the additional promotion offered by their competitors.
“That’s just going round and round,” said Pat Doerr, managing director of the Hospitality Business Association in Chicago. He said he has heard from several owners who say they have not been helped with the pandemic-related sale. “Apps spend millions of dollars telling customers that they are the best way to order food online, a cost that was later paid for by local bar and restaurant owners, with no position to afford the cost. “
Grubhub owns the Seamless and MenuPages platforms, while DoorDash also runs Caviar. All platforms are named after suit.
Chicago is among many cities that limit how many apps like DoorDash and Grubhub can charge at restaurants. Typically, when a restaurant uses an app to order food, platforms charge the restaurant up to 30 percent of the order as a commission. It hurt many restaurants during the pandemic disease, when many of their orders came from online platforms.
In November, Chicago limited the commission to 15 percent for most orders, a move Grubhub continued. unconstitutional. The city case said Grubhub’s other fees – sales, delivery, order processing – exceeded 15 percent despite the law.
A month after the cap began, DoorDash made a “Chicago fee,” a flat $ 1.50 fee on all orders in town. The complaint said this fee, which ended in July, misled customers into thinking that the fee was initiated by the town, not by DoorDash itself. It also pushed the DoorDash commission by more than 15 percent. In addition, the suit alleges DoorDash increased the fee for orders from restaurant chains such as McDonald’s and Taco Bell, even if the 15 percent cap did not apply to them.
The suits also claim that the apps have restaurants in their service without the restaurants ’permission. Complaints say DoorDash “is incorrect [a restaurant’s] name, menu, and other information to create unauthorized lists, ”while” Grubhub’s unauthorized list identifies a business partner… does not have that. “