The Federal Trade Commission (FTC) announced Wednesday that it will distribute more than $23.8 million to over 640,000 Grubhub customers and delivery drivers as part of a settlement stemming from allegations of deceptive practices.
The payments, which will be issued via checks or PayPal deposits, mark the latest step in a case that began in December 2024 when the FTC and the Illinois Attorney General filed a lawsuit against the Chicago-based food delivery platform. The suit accused Grubhub of using illegal tactics to grow its business, including misleading customers about the true cost of their orders and shortchanging drivers.
At the heart of the complaint were so-called "junk fees" that appeared on customer receipts as "service" or "small order" charges. According to the FTC, these add-ons could push the final price of a meal to more than double the advertised base cost, contradicting Grubhub's long-standing promise of a single, low-cost fee. The agency quoted a former Grubhub executive who described the pricing strategy as a "pricing shell game."
In addition to the financial penalties, the settlement requires Grubhub to overhaul its fee disclosure practices. The company must now present the total cost of an order upfront, including all mandatory charges, before a customer confirms their purchase. This change aims to prevent the kind of surprise price hikes that drew regulatory scrutiny.
For drivers, the FTC alleged that Grubhub misrepresented potential earnings and failed to meet its commitments, leading to lost income for many gig workers. The settlement includes provisions to ensure that drivers receive accurate information about pay and that any tips are passed through in full.
Grubhub did not admit wrongdoing as part of the settlement, but the company has said it is cooperating with regulators and has already begun implementing the required changes. The payout, which the FTC says is the largest of its kind for a food delivery app, will be distributed automatically to affected users, with no action required on their part.
The case reflects a broader regulatory push against hidden fees in the digital economy, an issue that has drawn attention from both federal and state authorities. Earlier this year, the FTC also stepped up efforts to block fraudulent payments in other federal programs, signaling a tougher stance on consumer protection.
Consumers who believe they are eligible for a payment but do not receive one by the end of the distribution period are encouraged to contact the FTC through its online complaint portal. The agency warns that it will never ask for payment or personal banking information to process these refunds, and it cautions against scams that may reference the settlement.
As the payments go out, the case serves as a reminder of the importance of transparent pricing in the gig economy, where customers and workers alike rely on clear terms. The FTC's action against Grubhub is part of a broader effort to curb deceptive practices that harm consumers, a priority that has gained traction in recent months.
