
Grubhub is using fake websites to drive up commission fees from real businesses - 9nGQluzmnq3M
https://www.theverge.com/2019/6/28/19154220/grubhub-seamless-fake-restaurant-domain-names-commission-fees
======
floatingatoll
"it has always been our practice to transfer the domain to the restaurant as
soon as they request it"

This is a form of financial blackmail. Transferring a domain usually requires
paying for one year's additional registration to a new registrar _and_ ,
sometimes, a transfer fee on top of that _and_ , most times, a hosting fee to
redirect it. So, to summarize simply, in story form (to make very explicit how
much of a scam this is for a business owner):

<GrubHub> We've speculatively registered 50 domains at a cost of $500 to
mislead people into using our order form, which at 20% commission* at $25 per
order average (that we take out of what we would have paid to you) will pay
itself back entirely in 100 orders placed.

<Restaurant> What?! Stop it.

<GrubHub> Hey, no sweat, we're happy to transfer those domains to you. All you
need to do is initiate transfers for all of those domains, at the cost of _at
least_ $500 out of the revenue that we've been reducing by 20% for every order
placed through these sites, and we'll be happy to transfer those domains to
you. Also you'll have to find someone to host the redirects for you, and clean
up the SEO damage we did. Best of luck with that!

<Restaurant> I don't have $500 because you've been cutting my revenue by 20%!

<GrubHub> Please rate your GrubHub Support experience by filling out a 5
minute survey.

* "Marketing commission": [https://ghlearnprod.wpengine.com/wp-content/uploads/2018/08/...](https://ghlearnprod.wpengine.com/wp-content/uploads/2018/08/Grubhub_One-Pager_Pricing-Overview_Final.pdf)

~~~
dehrmann
If it's really just a transfer, then I'd expect less than $100, and it's paid
to the registrar, not Grubhub, so it's not quite blackmail.

Now, what Grubhub is doing is unethical as fuck--best case. Worst case, it's
criminal impersonation or business identity theft.

~~~
floatingatoll
I assume $10 per domain and GrubHub is shown to register tens of domains.
Assuming a popular restaurant is worth 50 domains, they only need to capture
20% of average $25/order for qty.100 orders through 50 domains in 1 year to
pay the annual registration cost of the scam.

The scam is that restaurants can’t as easily pay $500/year to prevent GrubHub
from squatting on and SEOing typos of their domain, and GrubHub can simply go
make up another 50 domains when the owner takes over the first 50, because
they only need the 20% “marketing” ripoff from 100 orders to break even again.

~~~
JMTQp8lwXL
I'm really curious to know if GrubHub will simply purchase new domains after
handing over the previous fake site to the small business owners.

------
jacquesm
Here is 'Casey Winters', former growth hacker at GrubHub explaining their
strategy:

[https://firstround.com/review/pinterest-and-grubhubs-
former-...](https://firstround.com/review/pinterest-and-grubhubs-former-
growth-lead-on-building-content-loops/)

I absolutely can't stand the whole 'growth hacking' phenomenon, usually it
boils down to doing something at someone else's expense in order to improve
ones own position in the market. It's the mafia mentality brought to start-up
land, suddenly you find you have a 'partner' that you did not choose who skims
off a good portion of your profits.

~~~
sireat
If Casey Winters did the "growth hacking" at Pinterest he is responsible for
polluting search results with useless, paywalled Pinterest spam.

Pinterest is like ExpertSexChange dark pattern strategy taken to the max.

~~~
27182818284
Yeah for years I've found myself having to "-pinterest" out of searches. I
wish that it was just removed period.

~~~
russh
And this is how I know google does not give a shite about the people who
actually use their search engine as a search engine.

------
arbuge
If you read the article to the end they claim they're not cybersquatting.
Sounds pretty disingenuous to me. One of the rationales given is that they'll
transfer the domain to the restaurant if the latter requests it. Most of those
restaurant owners probably won't know what's going on, or who to ask to have
the domain transferred to them, or that they could even ask.

Edit: The text of their response is quite curious. In part it reads:
"Additionally, we have registered domains on their behalf, consistent with our
restaurant contracts. We no longer provide that service..."

If I were to guess, the fact that they'd be registering these domains was
something slipped into the small print of their original contracts. Most
restaurant owners probably wouldn't have noticed or understood the
implications. The practice could have then been discontinued once it served
its purposes of getting (or helping to get) Grubhub up to scale.

~~~
covercash
The pizza delivery app Slice does something similar... they buy domains that
look like they could be legitimate and then outrank the actual website of the
small local pizza shops with SEO. Then they tack on additional Slice fees and
send the order through to the pizza place. Here’s an example:

Actual site: [http://www.mariostogo.com/](http://www.mariostogo.com/)

Slice scam site:
[https://www.mariospizzaphiladelphia.com/](https://www.mariospizzaphiladelphia.com/)

Most of these small pizza shops have no idea this is happening and Slice is
just ripping off customers. They even claim listings or suggest edits on yelp,
foursquare, google, etc. with their Slice domain so customers assume it’s the
shop’s actual site. I wish someone from Yelp, Google, etc. would blacklist
Slice sites and kill the company and their scammy business practices.

Edit: I forgot to mention they created fake phone numbers for the shops too
which is what alerted me to this scam in the first place. I googled the number
for Mario’s and called it but a young female answered the phone and I heard
call center chatter in the background... normally when calling Mario’s one of
the guys with a thick accent answers and speaks in broken English. I’ve never
seen a single female employee work there in the 15 years I’ve been ordering
from them. On top of it all, the delivery address got screwed up between my
call in order that Slice intercepted and Slice then calling the actual Mario’s
number to relay my order. Come to think of it, I payed with a credit card over
the phone so Slice took my CC info and then relayed that as well... that
doesn’t seem kosher.

(I now have the real Mario’s number stored as a contact in my phone.)

~~~
sdoering
I realized that they even copy the logo. Is this even legal? How can it be in
any way legal to "impersonate" a business, just to funnel business away into a
funnel that forces the business to pay fees.

~~~
lopmotr
Seems analogous to buying a product from a retail shop then reselling it in
your own shop with a markup. If your SEO is better, then you can do that
successfully, and why not? The original seller was leaving money on the table
or failing to reach potential customers.

~~~
SmellyGeekBoy
It is - if you call your shop "Tesco" for example and use their logo and
branding to resell Tesco stuff at a slight markup. Of course this would get
you shut down very quickly in the real world. I don't know why it should be
any different just because it's online.

------
chrischen
This is not only not new, but has been done by countless other online ordering
sites since as early as 5 years ago. I know this since I tried to make
monthly-fee based ordering system for restaurants.

This turned out to be a hard sell so most other systems took the other route:
they bought a domain and did SEO for thousands of restaurants across the
country. SEO and websites is not something the average small business owner is
an expert on.

To make it even worse, some of these online ordering systems even convincend
Google maps that they were the official site, and a google maps search would
also list their fake website as the official website.

Of course to these businesses it just seemed like they were getting a lot of
sales from these companies, in reality these people were just typing in the
restaurant name into Google. The restaurants usually had to pay 10%-20% to
Grubhub, beyondmenu.com, et. al.

The most egregious company that does this is probably beyondmenu.com.

~~~
snlnspc
Grubhub itself started purchasing these domains in 2011.

~~~
chrischen
I have no idea when beyondmenu would have started, but I bet they were the
first.

------
wpasc
Is it just me or are these restaurant adjacent businesses involved in some
really bad practices. Between Yelp and Seamless, it seems to me that a
mutually beneficial symbiotic relationship will not form organically. (I'm
referring to how Yelp can be predatorial to businesses to make them pay yelp
or have Yelp negatively affect that business' yelp rating. There are plenty of
articles showing this but data is hard to come by)

~~~
djmips
It feels like they all want to ascend to that nirvana where they monopolize
and get to charge a fee on everything like iTunes.

~~~
scarface74
Surprisingly enough. I use a lot of things in the App Store (which I assume
you meant) without paying a dime to Apple - including Amazon digital purchases
and prime video, Hulu, Netflix, Office 365, Udemy and DirecTVNow.

Most of the money Apple makes from the App Store are for in app consumables
from games. Admittedly there are still a lot of legacy subscriptions from both
Netflix and Spotify before they pulled out of going through Apple for
subscriptions.

~~~
jimmaswell
the devs had to pay big fees to apple to get the app posted

~~~
saagarjha
$99 is almost nothing for a large company, who likely gives Apple a lot more
money via the 30% cut.

------
davemel37
This is obviously messed up, but its nothing new. Thousands of startups growth
strategy is ranking organically for brand search of their prospects. Google
sells that ad space on branded search, yelp and other directories rank for
them. The great big Internet Scam no one wants to admit is that digital
advertising is one big protections racket! Hijacking customers and selling it
back to businesses. Just look at super shady companies like rehabs.com that
ranks for thousands of rehabs and pushes their phone number on all the
listings.

If google and the internet went away tomorrow, small local businesses would
likely be better off. Instead of having to pay money just to keep competitors
from bidding on their brand or worrying about all the ways tech startups prey
on small local businesses!

------
arcticfox
In related news, the FTC sued and won a $1.4 million settlement [0] from a
concert ticket company in 2014. They basically place search engine ads that
sound like the venue, and use a domain that look like it should be the
official one for the venue.

Remarkably, this company is _still_ operating and still doing largely the same
thing in violation of the consent decree. I found out about it when my mom
tried to buy tickets from the Hult Center in Eugene OR, and lost $500 on
'hult.centereugene.com' thinking it was the official venue.

[0] [https://www.ftc.gov/news-events/press-
releases/2014/07/ticke...](https://www.ftc.gov/news-events/press-
releases/2014/07/ticketnetwork-marketing-partners-ryadd-secure-box-office-
settle)

------
MattyMc
Crazy to think the people who wrote this shady script probably reads
HackerNews. This is all kinds of immoral.

~~~
svskeptic
Yet another shiny example of money vs. ethics in the Valley.

Also, don't look towards the engineers, who may or may not have known. Look
towards the money. Who are the VCs invested in them and how many of them knew
and encouraged that in the name of growth? And, of course, the executives.

~~~
vanadium
GrubHub is based in Chicago, however.

~~~
notfromhere
the valley isn't just a place, its a state of mind.

~~~
HNLurker2
This is my new phone wallpaper image

------
benatkin
From their statement: "As a service to our restaurants, we have created
microsites for them as another source of orders and to increase their online
brand presence. Additionally, we have registered domains on their behalf,
consistent with our restaurant contracts. We no longer provide that service
and it has always been our practice to transfer the domain to the restaurant
as soon as they request it."

What service do they no longer provide? Registering domains on their behalf,
or microsites, or both? Going forward are they going to have the company
register their domain themselves and point it to GrubHub?

------
shay_ker
GrubHub also runs Google Ads to push GrubHub results to the top of search
results. SEO is a core part of their strategy, in the name of driving business
to restaurants. I'm sure many businesses don't care and don't mind, as long as
they're making money.

There's always the cost that GrubHub, or the restaurants' own solutions, could
be cannibalizing each other. It's a similar problem that any company has
across marketing channels. GrubHub could be more transparent about their
microsites, but there's always the possibility of some restaurant owners just
not understanding what they're getting after signing a contract no matter how
hard GrubHub tries.

Although, phone orders are definitely tough. Restaurants have historically
hated phone orders because of how GrubHub makes money off of them.

------
saravana85
Its a big scam. Registering 23,00 fake domain names and getting commission
from them is not at all acceptable. They need to be fined.

------
jpeg_hero
I guess not illegal, but super shady.

Pretty easy to see how incremental thinking leads to a shady result. We get
paid $X per order from our restaurant clients, they like more orders so if we
can get them more, they’ll be happier and pay us more -> improve SEO of
Grubhub<dot>com -> works -> what else can we do -> use our seo skills ->
register other websites do seo -> more orders.

Bad result, but know how they got there.

~~~
m-ee
Are there no trademark issues from using the restaurant's official logos?
These restaurants may not have filed on everything they should have and
probably don't have the resources to fight it regardless, but what if they
did? A large company would definitely send a C&D immediately for actions like
this.

~~~
btown
The Grubhub terms of service almost certainly include a license to use the
name and any trademarks for purposes including these shadow sites.

~~~
chrshawkes
And it will almost certainly land them in a huge class action lawsuit. The SEO
damage done to small businesses makes them almost reliant upon GrubHub after
making the mistake of doing business with them in the first place. Terms of
Service can say whatever it wants it's not an official legal document, just
something they turn to when their ethics violations get exposed.

------
ajxs
Surely this has 'class-action lawsuit' written all over it. I can't speak with
any authority regarding US law, but surely there are grounds for legal action
being taken against GrubHub.

~~~
LorenPechtel
They are using content from the real sites. Copyright violation.

------
JustSomeNobody
Another day, another company doing something scummy. I'm getting to the point
where I just don't want to check my feeds anymore.

~~~
aitchnyu
No news is good news. Shit's been happening since time immemorial. Your
awareness could be valuable. When the bad guy looks forward to his day, the
good guy shouldn't put up a weak effort.

------
JMTQp8lwXL
I wonder what the impact of the publication of stories like this have on
GrubHub's talent acquisition teams. I'd love for them to call me up, and I'd
love to ask them about this. When I graduated, the director of my department
encouraged us to participate in the Order of the Engineer, specifically to
think about the ethical dilemmas faced in situations like this.

Somebody with technical skills performed the purchasing of these 1,000s of
domains and setting up these fake sites. When that person continues on in
their career, will they proudly exclaim to prospective employers, how they
helped their company perform these tasks to leech off small businesses?

~~~
repomies691
> Somebody with technical skills performed the purchasing of these 1,000s of
> domains and setting up these fronts.

Not really hard core technical skills....

> When that person continues on in their career, will they proudly exclaim to
> prospective employers, how they helped their company perform these tasks to
> leech off small businesses?

The tasks might be divided in various ways so that not one guy did it. For
example the task of generating the front is delegated to an engineer who does
this feature so that restaurant can easily generate a website for themselves
if they want. What they leave out is telling that actually GrubHub sales
employee registers the domains for GrubHub and generates the webistes with
this one-click tool.

~~~
JMTQp8lwXL
You can try and suggest there aren't ethical dilemmas here, but there are.
Whether carried out by one or more than one individual, the intent would be
clear what you are contributing, whether it's the domain purchases (I could
only ponder why we're purchasing johnnyspizzanyc.com, for example, if we're
GrubHub) or if you're the one in charge of putting up the phony site at the
domain (which makes your role more obvious in the whole scheme).

~~~
repomies691
I wasn't suggesting that there aren't ethical dilemmas, just explaining the
processes how I think usually things like this work in bigger companies. Some
low-skilled worker can do the ethically questionable thing. The skilled
engineers just solve some cooler problems generally and provide tools to those
who deal with the ethically questionable work. And I am pretty sure that most
people, even talented engineers don't often think about that too much. They
just want to solve cool problems.

It is quite obvious that someone with not so much skills is more willing to do
unethical work than someone with higher skills and demand for those skills.

------
throwaway5752
The New Food Economy had an article on this that was a bit better
([https://newfoodeconomy.org/grubhub-domain-purchases-
thousand...](https://newfoodeconomy.org/grubhub-domain-purchases-thousands-
shadow-sites/)). It was posted two days ago:
[https://news.ycombinator.com/item?id=20306604](https://news.ycombinator.com/item?id=20306604)

------
oriettaxx
may domains I just checked from the list cited in the article are now not
working
[https://docs.google.com/spreadsheets/d/1m9vszEQ9A13tN4AFRXWX...](https://docs.google.com/spreadsheets/d/1m9vszEQ9A13tN4AFRXWXVKZamRpQFIltP452wSqAvFM/htmlview)
weird

------
9nGQluzmnq3M
I'm now getting 401s for a bunch of these Grubhub-created fake sites. Did they
take them down already, or am I hitting a geoblock? (Not in the US.)

[http://www.pochana.net/](http://www.pochana.net/)

[http://bestpizzali.com/](http://bestpizzali.com/)

~~~
lostsock
I get the following error when trying to view those sites from Australia:

Sorry about that

You do not have permission to view this site

~~~
oriettaxx
same same from Turkey

------
ycombonator
How is this not cyber squatting ? Also isn’t impersonating a business that you
don’t own a crime ?

------
simonebrunozzi
Maybe we should create a comprehensive list of these bad companies / bad
actors? Something like:

[https://gitlab.com/simonebrunozzi/dark-
companies/blob/master...](https://gitlab.com/simonebrunozzi/dark-
companies/blob/master/README.md)

------
tareqak
A different article with the same story: [https://newfoodeconomy.org/grubhub-
domain-purchases-thousand...](https://newfoodeconomy.org/grubhub-domain-
purchases-thousands-shadow-sites/) .

------
bpicolo
Eat24 was doing this prior to the Grubhub purchase. Perhaps they picked it up
from there? (It's also possible this started with grubhub and then bled to
Eat24 I suppose).

It's also for SEO, not just commissions.

------
huckyaus
Menulog and others have been doing this in Australia for at least 5 years.

------
akeck
"Everything is securities fraud." ~ Matt Levine

------
exabrial
FTC needs to get involved...

