D.C. is suing Grubhub, a third-party food delivery service, for allegedly misleading residents about hidden fees and for claiming to help local restaurants while making those same eateries pay for advertised discounts, among other practices.

The violations of the District’s consumer protection act outlined in the lawsuit from D.C. Attorney General Karl Racine’s office include listing restaurants on its platform with whom it had no relationship; showing higher prices for menu items than local eateries listed on their own menus; and various methods of keeping customers on Grubhub rather than allowing them to directly contact the restaurant and avoid the platform’s commissions.

“While D.C. consumers and frankly other consumers are happy to pay for the convenience of the food delivery service — I know I have — what they want to pay for, though, are fees that are upfront,” Racine tells DCist/WAMU. “What we saw with careful and meticulous investigation over a period of months is unfortunately that Grubhub has a practice, and I would even say a pattern, of charging for hidden fees [and] otherwise deceiving and misleading consumers.”

In one instance that Racine described as “one of Grubhub’s most shameless moves,” the company allegedly created an event that appeared to save consumers money while also supporting local restaurants hit hard by the then-new pandemic, even though Grubhub “took all of the money, and the discount that the consumer got was from the restaurant itself. That’s not cool, and it’s not legal,” he says.

A Grubhub spokesperson characterized the lawsuit as “frivolous” in a tweet. The company said in a statement that it had been engaging in dialogue with the D.C. AG’s office for a year and is “disappointed they have moved forward with this lawsuit because our practices have always complied with D.C. law, and in any event, many of the practices at issue have been discontinued.”

Racine confirms that his office was in talks with Grubhub before filing suit. “The Office of the Attorney General too would have liked to resolve this case without a lawsuit,” he says. “We don’t file lawsuits just to burn paper. We file lawsuits to actually put money back into the hands of consumers who were taken advantage of. As soon as Grubhub wants to return money to consumers, we will settle the case.”

The lawsuit calls for Grubhub to be transparent about its costs and fees, end its allegedly deceptive marketing practices, pay restitution to customers, and pay penalties to D.C. for violating its laws.

While Grubhub is a food delivery service operating in thousands of locations across the country, it neither makes food nor does it own the cars that bring the meals to consumers. Instead, it lists local restaurants on its platform and then relies on so-called “gig economy” workers to deliver the food, who do not receive a traditional salary or benefits. The company makes money off of the commission fees it charges restaurants for each order, as well as marketing and other services. (This is also how other third-party delivery apps, like DoorDash and UberEats, work.) About two decades after it was founded, Grubhub was acquired by European company Just Eat Takeaway for more than $7 billion in 2021.

This isn’t the first time that Racine’s office has sued third-party delivery apps. In 2019, the attorney general sued DoorDash for violations of the District’s consumer protection act, alleging that the company pocketed tips intended for delivery workers. A year later, the D.C. AG reached a settlement with DoorDash — the company paid $2.5 million and did not admit wrongdoing. In 2020, the office sued Instacart over allegations of charging deceptive fees and avoiding sales taxes. That lawsuit is ongoing.

At the start of the pandemic, the D.C. Council also took multiple steps to further regulate third-party delivery app practices in D.C. In May 2020, the council passed a temporary cap of 15% on the amount of commissions apps could charge restaurants (fees could often reach 30%). Months later, Racine sent DoorDash a cease-and-desist letter after learning that the company’s premium program planned to charge restaurants more than 15% to participate,

Another temporary bill from the D.C. Council in February 2021 prevented apps from offering a restaurant’s food without the establishment’s express permission.

One of the contentions in Racine’s lawsuit against Grubhub is that the company has listed restaurants on its platform despite not having a partnership in place.

“The problems with restaurants being listed without permission has been a problem that’s plagued our industry since the start of these apps,” Baan Siam managing partner Tom Healy told Washington City Paper in February 2021. He said that Grubhub added the Mount Vernon restaurant to its offerings without permission, using the establishment’s logo and menu, and the platform’s listing beat out the restaurant’s own website in search results. “They start absorbing our market footprint. Once they’ve absorbed everybody, they’ve got you under their thumb. If you don’t want to partner up, they threaten to delist you from a platform that ‘everyone is used to using.’”

Grubhub told shareholders in 2020 that it had added 150,000 non-partnered restaurants to the platform nationwide, though the company now says it has discontinued the practice.

Many restaurants have characterized third-party delivery apps as a “necessary evil.” Alternatives are tough to come by.

The team behind Shaw bar Ivy & Coney launched its own takeout and delivery platform, DC To-GoGo, in May 2020, when delivery and pickup surpassed serving customers inside.

“Once delivery and pick-up became our primary model, our first week of dealing with Grubhub, it was immediately apparent that we weren’t going to be able to survive under that model,” co-owner Chris Powers told DCist at the time.

Less than a year later, DC To-GoGo shuttered its app.