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AG healey sues grubhub for CHARGING RESTAURANTS ILLEGALLY HIGH FEES DURING COVID-19 PUBLIC HEALTH EMERGENCY
AG Alleges Online Food Delivery Platform Charged Fees to Restaurants that Exceeded State’s 15 Percent Fee Cap; Lawsuit Demands Refunds for Restaurants
BOSTON — Attorney General Maura Healey today sued online food delivery service platform Grubhub Holdings Inc. for allegedly illegally charging fees to Massachusetts restaurants that exceeded the statutory fee cap in place during the COVID-19 public health emergency. The AG’s lawsuit demands refunds for restaurants that were harmed by Grubhub’s alleged unlawful practices.
The lawsuit, filed today in Suffolk Superior Court, alleges that Grubhub violated a provision of the state’s economic development legislation, which prohibited Grubhub and other third party delivery service platforms from charging fees to restaurants that exceed 15 percent of an order’s menu price. The fee cap came into effect on January 14, 2021 and remained in place until June 15, 2021, when Governor Baker lifted the state of emergency in Massachusetts.
“We allege that Grubhub knowingly and repeatedly violated the fee cap statute, raising costs by thousands of dollars and harming restaurants that were already financially distressed and trying to survive,” said AG Healey. “We are suing to get money back to these establishments and to hold Grubhub accountable for its unlawful conduct. Our restaurants have been hard hit by this pandemic and we will do everything we can to help get them the relief they need to recover.”
Grubhub is a delivery service platform through which customers order restaurant food for delivery or pickup. Restaurants contract with Grubhub to use its services, which include advertising the restaurant’s menu, accepting and processing orders and payments, transmitting orders to the restaurant, and delivering orders to customers.
The AG’s complaint alleges that Grubhub routinely and knowingly charged fees to restaurants that exceeded 18 percent of the order’s menu price, in violation of state law.
The AG’s lawsuit seeks to secure refunds for affected establishments, as well as civil penalties of $5,000 per violation, together with the costs of investigating and prosecuting the case.
In February 2021, AG Healey sent letters to Grubhub and other online food delivery service platforms reminding them that a 15 percent fee cap was in place. In May 2021, AG Healey sent a cease and desist letter to Grubhub, ordering the company to cease charging covered establishments fees in excess of 15 percent of the menu price of the online order, in violation of the law.
This matter is being handled by Assistant Attorney General Michael Sugar and Legal Analyst Maggie Wallace, both of AG Healey’s Insurance and Financial Services Division.
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