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NYC lawmakers press Grubhub to refund mischarges

A majority of the city’s legislative body has warned in a letter to the service’s CEO that it might seek legislation if refunds aren’t made voluntarily.
Photograph: Shutterstock

A majority of New York City’s lawmaking body has called on Grubhub to tabulate and refund the fees restaurants have been assessed over the life of their partnership with the service for telephone calls that did not result in a delivery order. 

The request, sent in the form of a letter from New York City Council members to Grubhub CEO Matt Maloney, includes a warning that city lawmakers may seek legislation if the third-party delivery service fails to comply with the request. The communication was signed by a majority of the Council’s members. 

The group asks Grubhub to hire a third party to calculate and oversee a refund of the fees. The review would extend back to the beginning of the contractual relationship between the restaurants and the delivery service. Grubhub recently agreed to refund mischarges from up to 120 days prior to a complaint, after initially setting a review period of 60 days. 

City Council Member Mark Gjonaj has been investigating the charges as part of a larger review of how services such as Grubhub and Postmates have affected New York’s restaurant industry. The probe has resulted in a proposal that the State Liquor Authority cap the delivery sales commissions charged on establishments with a liquor license at 10%.

In hearings during June before the Council’s Small Business Committee, Gjonaj said that restaurants in the city were complaining about being charged a fee for a sale that was never made. Grubhub provides a telephone number that consumers can use to call a restaurant directly for delivery service. But some customers used the line for information calls, such as checking if a dish they were considering is allergen-free. Because they used the delivery number instead of the restaurant’s regular line, the establishment was often charged, according to Gjonaj, who chairs the committee.

Grubhub has maintained that reviewing every phone call manually to see if an order was placed is unfeasible. It uses an algorithm to track the calls, and says it is constantly improving that calculation to distinguish between information calls and the placement of an order. 

It has also pointed out that restaurants can retrieve any of the calls themselves via a Grubhub portal to see if they were erroneously charged, and then bring the error to the service’s attention for a refund.

“Our company was founded to help connect hungry New Yorkers with local restaurants,” Grubhub said in a statement. “We are happy to have an open, working dialogue with the New York City Council about how to better accomplish that goal—including improving our phone order process—as we provide both diners and restaurants with great service.”

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