Attorney General Andrea Joy Campbell has announced a settlement with Grubhub Holdings Inc. and Grubhub, Inc., (“Grubhub”), a major online food delivery service platform. The settlement resolves a 2021 lawsuit brought by the AG’s Office alleging that Grubhub illegally overcharged fees to Massachusetts restaurants in violation of the statutory fee cap in place during the COVID-19 public health emergency.
Under the settlement terms, Grubhub will pay a combined total of over $3.5 million to impacted restaurants. Grubhub will also pay $125,000 to the Commonwealth.
“Grubhub unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry,” said AG Campbell. “I am proud of my office’s dedicated work in securing meaningful financial relief for impacted businesses and we will continue to protect both consumers and businesses from such unfair and illegal practices.”
Grubhub is a major delivery service platform that contracts with restaurants to provide online customer ordering and delivery services. Grubhub charges fees to contracted restaurants per customer order; the fees are generally charged as a certain percentage of the restaurant menu price of each order.
As a result of the Commonwealth’s declared public health state of emergency during the COVID-19 pandemic, which significantly impacted customer traffic to restaurants, the Commonwealth enacted legislation that prohibited Grubhub and other third-party delivery service platforms from charging fees to restaurants exceeding 15 percent of an order’s restaurant menu price. The fee cap remained in place between January 14, 2021 and June 15, 2021, when former Governor Baker lifted the state of emergency in Massachusetts.
The AG’s lawsuit, filed in July 2021, alleged that Grubhub repeatedly violated the 15 percent fee cap by regularly charging fees of 18 percent or more, leading to significant financial harm to restaurants by often raising their operational costs by thousands of dollars. In March 2023, the Suffolk Superior Court ruled in favor of the Commonwealth, granting summary judgement on liability. The ruling indicated that Grubhub’s conduct had violated both the 15 percent statutory fee cap and the state’s primary consumer protection statute, Chapter 93A.
Impacted restaurants will be contacted regarding the settlement. Restaurants with questions may contact the Attorney General’s Insurance and Financial Services hotline at 888-830-6277.