Key takeaways
- Grubhub will distribute $23.8 million to 640,038 drivers and customers harmed by misleading earnings claims, unauthorized restaurant listings, and account access restrictions.
- The settlement mandates Grubhub verify all driver compensation claims with historical data, obtain explicit restaurant consent before listings, and establish customer account dispute resolution processes.
- The enforcement action follows a separate $25 million California driver settlement approved one month earlier, reflecting accumulated regulatory pressure across multiple jurisdictions.
Grubhub faces one of its largest regulatory comedowns in recent years as the food delivery platform begins compensating hundreds of thousands of affected drivers and customers. The Federal Trade Commission and Illinois Attorney General secured a settlement requiring the company to distribute $23.8 million across 640,038 recipients over alleged deceptive business practices spanning driver recruitment, customer account restrictions, and restaurant listings.
The payouts mark a significant moment in the ongoing scrutiny of gig economy platforms and their obligations to transparency. Most recipients will receive checks by mail, while others can opt for PayPal transfers, according to FTC announcements released this week.
The Violations That Triggered the Settlement
The lawsuit, filed jointly by the FTC and Illinois Attorney General in December 2024, centered on a series of practices that regulators contended undermined both workers and consumers on the platform.
Driver Earnings Claims and Worker Recruitment
One of the core allegations targeted how Grubhub pitched earning potential to delivery drivers. The company made representations about how much drivers could realistically earn that lacked sufficient substantiation, according to the FTC’s complaint. The allegations suggest these misleading claims influenced thousands of workers to join the platform based on inaccurate income projections. This pattern of recruitment deception mirrors broader concerns about how gig platforms attract workers—through optimistic earnings forecasts that don’t account for expenses, downtime, or supply-and-demand fluctuations.
The settlement requires Grubhub to fundamentally change how it advertises driver compensation, ensuring all claims about earnings are backed by historical data from the platform and clearly explain the basis of calculations. The company can no longer make forward-looking income promises without disclaimers and supporting evidence.
Unauthorized Restaurant Listings at Scale
Another major focus of the FTC’s case involved Grubhub’s restaurant inventory practices. According to the complaint, as many as 325,000 restaurants appeared on the Grubhub platform despite having no affiliation with the company. The FTC alleged this deceptive sizing inflated the platform’s perceived market presence and user choice—a critical metric for both consumer appeal and advertiser confidence.
The scale of this issue is striking. In some cases, restaurants that explicitly requested removal reportedly faced resistance from Grubhub, which instead pressured them to enter paid partnerships to have their listings managed professionally. This forced-partnership dynamic suggests Grubhub treated delisting requests as negotiation opportunities rather than consumer protection obligations.
The settlement now mandates explicit written consent before listing any restaurant and requires Grubhub to honor removal requests promptly, reversing a practice that prioritized platform metrics over merchant agency.
Account Freezes and Customer Fund Access
A third violation centered on how Grubhub restricted customer accounts and access to funds. The complaint alleged the company froze accounts and withheld money in ways that left users unable to retrieve their own balances or resolve disputes, with limited transparency about why the restrictions existed or how to challenge them. This practice created a chilling effect where customers feared losing access to their money without clear recourse.
The settlement requires Grubhub to establish a formal process allowing customers to challenge account restrictions and request access restoration, with the company obligated to respond within defined timeframes and provide explanations for why restrictions remain in place.
Operational Changes Grubhub Must Implement
Beyond the financial penalty, the settlement imposes concrete structural changes to how Grubhub operates across three critical areas. The company must overhaul its driver recruitment messaging, removing any claims that cannot be verified with actual historical earning data. All communications about driver income must include clear disclosures about the basis of any estimates and acknowledge variability based on location, time, and order volume.
For restaurants, the company faces new affirmative obligations. Listing restaurants without consent is now prohibited; restaurants must actively authorize their presence on the platform and can request removal at any time without facing pressure or delay. Grubhub must maintain records demonstrating it obtained proper authorization for each merchant listing.
Customer account management also receives new requirements. Rather than facing indefinite freezes, customers can now formally dispute restrictions and demand explanations. Grubhub must respond to account challenges within specified timeframes and cannot maintain restrictions without clear documentation of policy violation or fraud.
These changes require Grubhub to invest in compliance infrastructure, from verification systems for driver earnings claims to consent management for restaurant listings to dispute resolution for customer accounts.
The Broader Delivery Platform Accountability Landscape
Grubhub’s settlement arrives in a landscape where other major delivery platforms face mounting regulatory pressure. DoorDash has encountered criticism and legal action centered on driver compensation practices, while Uber Eats has dealt with separate allegations involving customer charges and its handling of restaurant relationships.
The timing underscores the accumulation of regulatory exposure facing Grubhub. Just one month before this FTC settlement, a federal judge granted final approval to another major settlement affecting the company’s California-based drivers. That agreement covered approximately 60,000 drivers and carried a settlement value of nearly $25 million, suggesting Grubhub faced parallel legal exposure across multiple jurisdictions simultaneously.
Together, these settlements indicate that gig economy platforms cannot rely on terms-of-service language to shield themselves from liability for affirmative misrepresentations. When companies make claims about driver earnings, maintain unauthorized merchant listings, or restrict customer access to funds without clear justification, federal and state authorities will pursue enforcement regardless of fine-print disclaimers.
Distribution and Impact
The FTC’s distribution process began this week, with checks mailing to the majority of the 640,038 affected recipients. PayPal transfer options are available for those preferring digital payment. Given the $23.8 million total divided across more than 640,000 individuals, per-person payouts likely range from tens to low hundreds of dollars depending on the harm category and individual circumstances.
For drivers, the settlement provides limited financial restitution but establishes new protections against misleading recruitment claims. For restaurants, it eliminates the risk of surprise listings and forced-partnership negotiations. For customers, it creates enforceable rights to challenge account restrictions.
The settlement does not retroactively remove restaurants already improperly listed during the period covered by the lawsuit, nor does it provide make-whole remedies for drivers who earned below the amounts Grubhub claimed were possible. These limitations reflect the constraints of settlement agreements, which typically prioritize forward-looking compliance changes over comprehensive historical redress.
Frequently Asked Questions
How much money is Grubhub distributing and to how many people?
Grubhub is distributing $23.8 million to 640,038 people, including both drivers and customers, with most receiving checks by mail and some receiving payments through PayPal.
What specific practices did the FTC allege that Grubhub engaged in?
The FTC alleged Grubhub made misleading claims about driver earnings, listed as many as 325,000 restaurants without their consent or affiliation, restricted customer account access to funds without clear justification, and resisted restaurant removal requests while pressuring businesses into paid partnerships.
What changes must Grubhub make under the settlement?
Grubhub must verify all driver earnings claims with historical data, obtain explicit written consent before listing restaurants, honor restaurant removal requests promptly, and establish a formal process allowing customers to challenge account restrictions and demand access restoration.
