AG Healey sues Grubhub for charging restaurants illegally high fees during COVID-19 public health emergency

Massachusetts

AG alleges online food delivery platform charged fees to restaurants that exceeded state’s 15 percent fee cap; lawsuit demands refunds for restaurants

BOSTON/SPRINGFIELD (SHNS/WWLP) – Attorney General Maura Healey sued the food delivery platform Grubhub on Thursday, arguing that the company dealt restaurants a financial blow by violating a fee-cap in place during the COVID-19 state of emergency.

The lawsuit, filed in Suffolk Superior Court, is seeking refunds for affected restaurants and civil penalties of up to $5,000 per violation, along with costs related to investigation and prosecution. A January 2021 law capped the fees that third-party delivery services could charge restaurants at 15 percent of an order’s menu price, for the duration of the state of emergency. 

“The thing that I’m against is not knowing about it,” said Nadim Kashouh, owner of Nadim’s Restaurant in downtown Springfield. “If you tell me about it if I know to expect it I’m okay with that but they kind of snuck it in.”

Healey’s complaint alleges that Grubhub “knowingly violated” that law by charging a 15 percent “marketing and delivery fee” plus an additional fee of 3 percent or more for “collecting payments, fraud monitoring, customer care,” for a total of at least 18 percent. “Grubhub continued to apply these overcharges, despite complaints from restaurants informing Grubhub that the practice did not comply with the law while the Delivery Fee Cap Statute was in effect,” the complaint said.

Two other major delivery companies, Uber Eats and Door Dash, changed their practices to charge fees within the 15 percent limit while the statute was in effect, according to the lawsuit. Healey’s office also sent Grubhub a cease and desist letter earlier this year. “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,” she said in a statement.

The fee cap took effect on Jan. 14, 2021, and lapsed when the state of emergency ended on June 15. Legislation that would temporarily reinstate the 15 percent cap is tied up in a House-Senate conference committee. 

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