Uber has reached a $10 million settlement with the City of Chicago for listing local restaurants on the Uber Eats and Postmates apps for delivering food without the restaurants’ permission, as well as charging additional commission fees.
According to Cohen Milstein Sellers & Toll, a law firm, more than $5 million will be spent paying back compensation to affected Chicago restaurants, and $1.5 million will go to Chicago for costs incurred during the the city’s two-year investigation into the matter. represented the city.
Chicago isn’t the first city to deal with food delivery apps with restaurants without their consent, and this isn’t Postmates’ first offense. Several apps, including Seamless, Grubhub, and DoorDash, have been accused of taking restaurant menus listed online and posting them on their own platforms. When a customer ordered through the apps, couriers placed orders with restaurants on behalf of the customer. Restaurants have said the practice is leading to customers ordering menu items that no longer exist or are not priced correctly, canceling orders and a lack of control over food handling and delivery.
“Today’s settlement reflects the city’s commitment to creating a fair and honest marketplace that protects both consumers and businesses from unlawful conduct,” Mayor Lori Lightfoot said in a statement. “Chicago’s restaurant owners and employees work diligently to build their reputation and serve our residents and visitors. That is why our hospitality industry is so crucial to our economy, and it only works if there is transparency and fair prices. There is no room for misleading and unfair practices.”
The claims against Uber mirror separate lawsuits from Chicago against Grubhub and DoorDash last summer alleged similar deceptive business practices. Both cases are ongoing.
Last September, Chicago contacted Uber when it discovered the illegal conduct, according to a statement from the city. The ride-hail company responded by paying back $3.3 million to Chicago restaurants charged commissions in excess of 15% in violation of the city’s emergency 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 allegedly charged commissions in excess of the reimbursement cap; $500,000 to restaurants that Uber has listed on its platforms without permission and that are not currently under contract with Uber; and $2.5 million in commission waivers to affected restaurants.
“We welcome any and all assistance provided to the independent restaurants that have struggled during the pandemic and continue to bear the rising cost of doing business,” Sam Toia, president and CEO of the Illinois Restaurant Association, said in a statement.
The city also alleges that Uber engaged in misleading advertising practices, such as falsely advertising that certain merchants were “exclusive” to its platform and that certain subscribers would receive free deliveries.
Uber denied any allegations, according to the settlement. Josh Gold, an Uber spokesperson, told businessroundups.org:
“We are committed to supporting Uber Eats restaurant partners in Chicago and are pleased to put this matter behind us.”
It is estimated that more than 2,500 Chicago restaurants are eligible to benefit from the Uber settlement Chicago grandstand. Restaurateurs can apply for an allowance online by January 29.
