Grubhub, a food delivery app, has recently been accused of including false promotions and excessive fees on its orders. Los Angeles County filed a lawsuit against Grubhub on Feb. 21 for its bait-and-switch pricing, citing its website for including promotions that claim individuals can “order online for free.” The inclusion of unknown delivery charges has also been an issue for other delivery apps, such as Doordash and Uber Eats, leading to public calls for regulating these fees.
To tackle the issue of junk fees, California is enacting Senate Bill 478 with the support of State Sen. Bill Dodd, Sen. Nancy Skinner and California Attorney General Rob Bonta. SB 478, said to go into effect in July 2024, will remove unknown and unnecessary fees that are tacked onto the original cost. SB 478 will now require delivery sites to disclose the surcharges added to deliveries to account for employee benefits and other expenses. This bill also oversees the advertising and language utilized on the websites and apps of these food delivery companies to prevent false claims of lesser fees. Although the bill has not passed, Doordash, Uber Eats and Postmates representatives have already released statements of compliance with these revised requirements. Addressing these delivery charges can be vital in helping maintain food pricing, especially with the prevalence of economic inflation, and ensuring that delivery personnel receive the appropriate payment and benefits for their services.
The service fees charged by food delivery companies are partly due to the passing of Proposition 22, which classifies delivery drivers as outside contractors. Through this classification, workers are provided full employment benefits, minimum earning guarantees and healthcare stipends for drivers. Grubhub specifically added $1.50 to their flat fees to help cover the cost of these benefits. Including such fees for driver benefits would need to be directly disclosed once SB 478 is implemented.
While companies could abuse these added fees, interviewed drivers stated that the benefits provided through Prop. 22 don’t offset their general earnings. However, with Grubhub’s new tipping prompt — “Leave an optional tip on top of driver benefits” — consumers might feel less inclined to tip because of the already added fees. Some drivers brought up the issue of tip-baiting, where customers enter a certain tip amount before receiving their order and then lower or entirely remove that tip once that order is received. The reduction of tipping can be accounted for by multiple issues likely out of the driver’s control, including food quality. In most cases, customers state that the increase in service fees, with some charges up to $8, discourages individuals from tipping.
The reluctance to tip goes hand in hand with inflation. As food delivery companies such as Grubhub increase their pricing to remain competitive with other delivery apps, consumers are likely unable to match the prices of added-on fees alongside gratuity. Holding food delivery companies accountable for pricing helps consumers and delivery drivers know what they are paying for.
A lawsuit against Grubhub for its delivery fees could be too extreme, especially based on the wording of its promotions. However, the implications of a suit point toward a greater issue of accountability for pricing and acknowledgment of the needs of consumers and delivery drivers.
