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March 22, 2023

GrubHub overcharged fees to Mass. restaurants

Photo | Courtesy Andrea Campell's campaign website Massachusetts Attorney General Andrea Campbell

Suffolk County Superior Court has ruled food delivery service platform Grubhub Holdings Inc. illegally overcharged fees to Massachusetts restaurants, which was in violation of the state’s statutory fee cap implemented during the COVID-19 public health emergency.

The ruling from March 16 was announced by Massachusetts Attorney General Andrea Campbell’s office, which sued GrubHub in July 2021 for violating the Commonwealth’s consumer protection act. The AG’s office was seeking refunds for restaurants. 

The lawsuit against GrubHub remains active and ongoing.  

“I am proud of the team and this thoughtful ruling which found that Grubhub illegally overcharged Massachusetts’ restaurants as they struggled to stay afloat during the pandemic,” Campbell said in a March 16 press release. “We look forward to continuing with our case to hold the company accountable and refund restaurants for the fees they were illegally charged.”  

Grubhub is a delivery service platform where customers order food from restaurants for delivery or pickup. Restaurants contract with Grubhub to use its services. Grubhub was founded in 2004 and is part of the Dutch multinational company Just Eat N.V., which acquired the company for $7.3 billion.

The lawsuit alleges Grubhub violated a provision of the state’s economic development legislation, prohibiting Grubhub and other third-party delivery service platforms from charging fees to restaurants exceeding 15% of an order’s menu price. The fee cap came into effect on Jan. 14, 2021, and remained in place until June 15, 2021, when the state of emergency in Massachusetts was lifted. The lawsuit alleges Grubhub charged fees in excess of 18% of the order’s menu price. Grubhub opposed the lawsuit, arguing it had not violated the emergency law and, if it had violated the law, the law was unconstitutional. 

The attorney general’s office sent letters to Grubhub and other online food delivery service platforms to remind them about the fee cap in February 2021. The attorney general then sent a cease and desist letter to Grubhub in May 2021, demanding the company stop charging fees in excess of 15% of the purchase price of the online order, which was in violation of the law. 

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