Uber has agreed to a $10 million settlement with the City of Chicago for listing local restaurants in the Uber Eats and Postmates food delivery apps without the restaurants’ consent, as well as for charging excess commission fees.
Over $5 million will go toward paying damages back to Chicago restaurants that were affected, and $1.5 million will go to Chicago for the costs incurred during the city’s two-year investigation into the matter, according to Cohen Milstein Sellers & Toll, a law firm that represented the city.
Chicago’s not the first city to deal with food delivery apps listing restaurants without their permission, and this isn’t Postmates’ first offense. Several apps, including Seamless, Grubhub and DoorDash, have been accused of pulling restaurant menus listed online and putting them on their own platforms. When a customer ordered through the apps, couriers would place orders to restaurants on the customer’s behalf. Restaurants have said the practice leads to customers ordering menu items that no longer exist or aren’t priced correctly, cancelled orders and lack of control over food handling and delivery experience.
“Today’s settlement reflects the City’s commitment to creating a fair and honest marketplace that protects both consumers and businesses from unlawful conduct,” said Mayor Lori Lightfoot in a statement. “Chicago’s restaurant owners and workers work diligently to build their reputations and serve our residents and visitors. That’s why our hospitality industry is so critical to our economy, and it only works when there is transparency and fair pricing. There is no room for deceptive and unfair practices.”
The claims against Uber mirror separate lawsuits from Chicago against Grubhub and DoorDash last summer that alleged similar deceptive business practices. Both cases are ongoing.
Last September, Chicago reached out to Uber when it discovered the unlawful conduct, according to a statement from the city. The ride-hail company responded by repaying $3.3 million to Chicago restaurants that had been charged commissions over 15% in violation of the city’s emergency fee cap ordinance, removed all non-consensually listed restaurants from the platform and agreed not to list Chicago restaurants without permission in the future.
Under Monday’s settlement, Uber will pay an additional $2.25 million to restaurants that were allegedly charged commissions higher than the fee cap; $500,000 to restaurants that Uber listed on its platforms without consent and that don’t currently contract with Uber; and $2.5 million in commission waivers to affected restaurants.
“We welcome any relief provided to the independent restaurants that struggled throughout the pandemic and continue to shoulder the rising costs of doing business,” said Sam Toia, president and CEO of the Illinois Restaurant Association, in a statement.
The city also alleges that Uber participated in deceptive advertising practices like falsely advertising some merchants were “exclusive” to its platform and that certain subscribers would receive free deliveries.
Uber denied any wrongdoing, according to the settlement. Josh Gold, an Uber spokesperson, told TechCrunch:
“We are committed to supporting Uber Eats restaurant partners in Chicago and are pleased to put this matter behind us.”
More than 2,500 Chicago restaurants are estimated to be eligible to benefit from the Uber settlement, according to the Chicago Tribune. Restaurant owners can apply for relief online by January 29.
Source @TechCrunch
