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Grubhub Settlement Payouts: FTC Sends $23.8 Million to Over 640,000 Drivers and Diners

More than 640,000 delivery drivers and diners are set to receive payments totaling $23.8 million following a regulatory settlement involving food delivery company Grubhub. The distribution addresses allegations that the company engaged in deceptive advertising regarding driver earnings, improperly restricted customer accounts, and listed hundreds of thousands of restaurants without permission.

What Happened

The Federal Trade Commission announced it is issuing payouts to 640,038 affected individuals. The funds are being delivered primarily through checks sent by mail, with selected recipients receiving their payments electronically through PayPal.

These payments originate from an action initiated in December 2024 by the FTC alongside the Illinois Attorney General. The legal complaint outlined multiple unlawful practices by Grubhub, focusing on driver pay claims, customer account management, and unauthorized restaurant listings.

According to the regulatory complaint, Grubhub featured as many as 325,000 restaurants on its platform that had no affiliation with the company, using the extensive catalog to make its service appear larger than it was. Furthermore, regulators stated that the company at times refused to remove unaffiliated eateries after being requested to do so, instead attempting to negotiate paid partnerships with them.

Key Highlights

  • Total Settlement Value: The FTC is distributing $23.8 million to affected parties.
  • Number of Recipients: A total of 640,038 diners and drivers will receive payments via mail or PayPal.
  • Origin of the Case: The payouts resolve a December 2024 lawsuit filed by the FTC and the Illinois Attorney General.
  • Unaffiliated Listings: Regulators alleged Grubhub listed up to 325,000 restaurants without their consent.
  • Operational Changes: Grubhub must now secure restaurant consent prior to listing, ensure driver earnings representations are accurate, and provide customer support mechanisms for restricted accounts and locked funds.
  • Other Legal Actions: The distribution follows a separate, nearly $25 million settlement involving approximately 60,000 Grubhub drivers in California.

Why This Matters

The resolution enforces significant operational requirements on Grubhub, compelling changes to how the platform advertises to gig workers, interacts with independent restaurants, and manages diner accounts. Specifically, Grubhub is required to ensure truthful representations regarding potential driver pay, obtain formal consent before listing food establishments, and offer diners clear pathways to challenge account locks that restrict access to their money.

The action also reflects ongoing regulatory focus on the wider food delivery market. Other major delivery services have previously encountered legal challenges and scrutiny, such as DoorDash regarding worker pay and Uber Eats regarding billing practices and restaurant partnerships.

What to Watch Next

Eligible recipients will receive their funds through mailed checks or PayPal transfers. In accordance with the settlement terms, Grubhub must continue operating under the mandated business standards regarding listing consent, earnings disclosures, and customer account dispute resolution.

Frequently Asked Questions

How are the Grubhub settlement funds being distributed?

The FTC is sending payments directly to 640,038 affected individuals, with the majority receiving physical checks in the mail and some receiving payments through PayPal.

What did the FTC lawsuit accuse Grubhub of doing?

The complaint alleged that Grubhub misled drivers about potential earnings, restricted diner access to accounts and funds without proper appeal options, and listed up to 325,000 restaurants without their permission.

What changes must Grubhub make under the settlement?

Grubhub is required to obtain restaurant consent before listing them, provide accurate earnings advertisements to drivers, and offer consumers a process to challenge account restrictions and access their funds.

Source: TechCrunch and Federal Trade Commission announcements.