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If there is a pandemic has been benefit from food delivery applications, as many restaurants closed their dining halls to ensure that diners could take to the streets. The lawsuits filed by Chicago City Council say that Made by Dash and Grubhub it used the pandemic to deceive restaurants and diners, unfairly charge large commissions and strengthen the hospitality industry that was struggling to avoid emergency supplies. Mayor Lori Lightfoot said in a press release that the applications use “unfair tactics and fraud”.
Different clothing charges for various allegations against the companies, but the allegations revolve around alleged fraudulent practices in the early stages of the pandemic when the blockades closed many restaurants.
The lawsuit alleges that the company took steps to avoid the city’s emergency quota limit, which limited commissions on most orders to 15 percent. Costumes say Grubhub continued to collect fees of more than 15 percent, while DoorDash set an arbitrary “Chicago fee” to increase its revenue.
In separate statements, the companies said the lawsuits were “baseless” and said they intended to fight in court.
Grubhub’s lawsuit alleges that the company used the pandemic to market the “save local restaurants” campaign, which ultimately harms struggling restaurants. The “Help Dinner” promotion offers a $ 10 discount on orders from local restaurants for $ 30 or more; the lawsuit describes it as a “losing deal for restaurants”.
$ 10 was deducted from the bill, but still the restaurants had to pay a commission of up to 30% of the total price of the order; the campaign began a few months before Chicago limited commission fees. As a result, the lawsuit says a $ 30 order would only earn $ 11 for a restaurant. The lawsuit alleges that if the board members knew how much went to the platforms, compared to the restaurants, they would not use them to make the request.
A spokesman for Grubhub said participating restaurants agreed to join the promotion and were aware of the conditions before signing up. Participants were told they would promote it as part of the campaign; restaurants that refused would lose the additional promotion offered to competitors.
“That’s just a twist,” says Pat Doerr, CEO of the Hospitality Business Association in Chicago. He says he has heard of multiple owners who said the pandemic-related marketing did not help. “These apps have spent millions of dollars telling customers that they are the best way to order food online, in the end the expense that local-owned bars and restaurants will have to pay when they are unable to afford that cost.”
Grubhub owns the Seamless and MenuPages platforms, and DoorDash also runs Caviar. All platforms were named on the suit.
Chicago is among the many cities where apps like DoorDash and Grubhub can charge at restaurants. Generally, when a diner uses an application to order food, the platforms charge the restaurant 30 percent of the order as a commission. This hurt many restaurants during the pandemic, as many of their orders came through online platforms.
In November, Chicago cut the commission to 15 percent for most orders, a move maintained by Grubhub it was unconstitutional. The city’s lawsuit alleges that Grubhub’s other fees — marketing, delivery, order processing — exceeded the law by 15 percent.
A month after the cap went into effect, DoorDash set a “Chicago fee,” a flat charge of $ 1.50 on all city orders. The complaint alleges that the fee, which ended in July, deceived customers into thinking the council had imposed the charge, not DoorDash itself. This also boosted DoorDash’s commission by more than 15 percent. In addition, the lawsuit alleges that DoorDash added a fee to orders from chain restaurants like McDonald’s and Taco Bell, even though the 15 percent limit did not apply to them.
The garments also claim that the apps allow restaurants to access their services without the permission of the restaurants. Complaints say “DoorDash” is misused [a restaurant’s] to create names, menus, and other information lists without permission, “while Grubhub’s” unauthorized lists indicate business affiliation … that doesn’t exist. “
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