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Grubhub sued for listing restaurants without permission (axios.com)
403 points by cwwc 33 days ago | hide | past | favorite | 274 comments



I hope there's a strong precedent set here. Companies like Grubhub list restaurants on their site/app, but put the wrong phone number on it- one that goes to their own people instead. That's clearly some kind of fraud or misrepresentation.

Makes me feel like I should setup a phone number and a website called something like "GrubhubHelp.com", and list a help number for assistance with GrubHub orders. Then when customers call to complain, I'll play an ad for the competitor who has paid me the most money.

Seems only fair, right?


FYI - the same thing happens with Hotels.com. When you "call the hotel" with the number listed, I learned that the representative is actually a Hotels.com rep, not a hotel employee or hotel call-center employee.

This matters. In my case, I asked about my corporate discount and they gave me a vague answer about "I dont see anything in the system", which I guess was technically not a lie, but definitely deceitful. I wised up because I knew we had a corporate discount and asked who I was speaking to. They gave vague answers like "I'm the call center representative" or "I'm here to help you book with X hotel".

The scam is they are trying to book you at a higher price w/o applying any corporate discounts, etc (and probably keeping a booking/affiliate fee). This should be illegal.


I had to recently book a hotel for a few nights. Hotels are mostly empty because of COVID. When I called to book a room it was clearly a script being followed with high pressure tactics including saying rooms are filling up quickly. Once I arrived at the hotel it looked mostly dead, and I when I asked the manager who was helping me behind the counter, he said they were at 10% capacity. It should also be illegal for businesses to misrepresent their inventory.


So many websites resort to this, frankly it's embarrasing used car salesmen level tactics. My favorite is the petition websites like change.org. The ticking of people signing the petition before your eyes is entirely artificial. Refresh the page and the count resets.


Oh so like reddit today!


To be fair, they had just experienced a sudden exponential surge in interest: your phone call.


/s?


Seems highly redundant.


The UK's Competition and Markets Authority had a clamp-down on exactly this last year.

https://www.theguardian.com/business/2019/feb/06/hotel-booki...


I had learned after moving to the US (pretty much any western country), it is all about "wordplay". What the agent did was not illegal. What they said could be true in their own terms.


I don't know what's more amusing, the fact that they didn't change the script at all for the current conditions, or that there are probably still people falling for it.


I agree with the sentiment. But, it should not be illegal to lie about your inventory. As long as you are receiving what is promised by them at a price that you both agree, its all fair game.


I don't understand this position, how is it not a form of fraud?


Atleast in the EU it even is forbidden to use false information ("only X rooms/seats/items left" if that isn't true) as a sales tactic.


Deceiving the the other party is a market failure of asymmetrical information. Like being told about a car being all peaches but it's actually a lemon. It's unlawful in most developed countries and is a great way to get a fine and/or a prison sentence.


This can come to a head when traveling.

Years ago, I had used hotels.com to book a reservation. I had booked a hotel near the destination airport for one night before continuing to travel to my actual destination. The hotel advertised that they can give refunds or change booking with 24 hours notice.

My flight was cancelled and rescheduled for the next day, making that one-night hotel stay a waste if I couldn't reschedule or get a refund for it.

Apparently hotels.com doesn't have the same policy as the hotel I had a reservation at, so while still in the airport, I had to argue with about 3 layers of people before it was made apparent that I wasn't speaking to the hotel.

In the end, hotels.com "made an exception" for me and refunded my money which I was then able to use to book another night. I suspect that exception was made because they were able to get a refund from the hotel itself.


I was doing a stint of formulating our national enterprise architecture, something I was invited to because of my local work on the subject.

During this period I staid at hotels quite often, and learned that the best way to get a good and cheap booking is to E-mail the hotel directly. The cheap part came from being an enterprise organisation, but as far as secure and easy booking goes I always email hotels directly for private stays as well. Maybe it’ll cost me a few extra dollars, but I avoid the hassle of having to deal with hotels.com who among other things charge you up front and make it almost impossible to cancel.


My experience (years ago) was that the hotels would prefer people did this as they don't like the middlemen either.


I always lookup the hotel on an aggregator (Hotels.com usually) and then call the hotel directly to book.


and you call the number listed on hotels.com? In this case you are calling hotels.com and not the hotel itself.


No, I lookup the hotel's actual phone number. I don't rely on any contact info on hotels.com, only their map data of where the hotels are and rates for rough pricing.


Just ask a random question only a real hotel employee would know - like "What time is breakfast served?"


The problem is I dont have a "skeptical resting state" where i'm constantly trying to sniff out scams.

I google "Fairmont Hotel Berkeley" because that is what my co-workers are staying at. I get an 800 number, which I call. The person is friendly and asks "Can I help you book a room at Fairmont Berkeley?" Business customers, especially, are somewhat price insensitive since they are not paying for trips.

Sad world.


I suppose you should know this also, to detect a lie.


I don't think the intent is to have you book at a higher price. The intent is to get the booking and collect the fee. And they just don't care that they can't process corporate codes.

They are misrepresenting things, and asking about a discount code probably should get you forwarded to the hotel (or their corporate call center). It can get a little hairy when Hotels.com (or whoever) has a lower price or more rooms available than the hotel directly (sometimes the Online Travel Agencies will commit to a number of rooms over a time frame, then they have pricing autonomy and exclusive availability; probably not happening in covid times though)


I don't remember phone numbers being listed on hotels.com.

If you dig up the support number it is going to the hotels.com call center. It's not deceptive because they have your booking and your money, they can see your order and rebook you in another hotel which the direct hotel wouldn't be able to do (this happens regularly when there are problems like the hotel has no room).

If you have a corporate discount with a specific hotel you definitely need to deal with the website of the hotel directly, not hotels.com


hotels.com is an Expedia brand, not a company.


[ Disclaimer: GH employee but speaking independently & not representing the company in this message ]

You're mixing up controversies - there was a separate "feature" Grubhub did years ago where grubhub would stand up online presence for restaurants to bring in web search traffic (branded websites, search results on grubhub.com, etc) and list a grubhub phone number instead of the real phone number so that grubhub could collect comission on the orderflow that they're raking in for the restaurants. These were partnered restaurants, so they were signing up for this and could opt out of any of these services, in theory anyways I wasn't part of this so I have no idea if it's really that easy to opt out

Separately, a practice pioneered by ubereats and doordash, "Place and Pay" is a new thing in the past 2-3 years where Grubhub will just list a bunch of restaurants without them asking for it ("non-partnered"), and when you place an order online the driver will go in and order takeout, then carry it to you. The restaurant can opt out of this, but they never asked for the service in the first place so it's kinda shitty. That's what this article is about.

Grubhub was against place and pay at first, when UberEats and Doordash began doing it (not because Grubhub is selfless but because partnered restaurants are way more profitable), but resisting place and pay turned out to be a recipe for losing market share so that's no longer the case.


"Grubhub was against place and pay at first, when UberEats and Doordash began doing it (not because Grubhub is selfless but because partnered restaurants are way more profitable), but resisting place and pay turned out to be a recipe for losing market share so that's no longer the case."

If Grubhub actually took a stand and showed they not only did not do this sort of behavior, I would actually use it, and I would pay the premium for delivery (to make sure the restaurant makes money and the driver makes money).

Instead, I never use your service, and I never plan to. I go out of my way to call a restaurant (and because of shady behavior like that, I take the extra time to make sure it is that restaurant and not some call center) and I will physically go to a restaurant because to pick up my order, so I know they are not losing money on orders.


> If Grubhub actually took a stand and showed they not only did not do this sort of behavior, I would actually use it, and I would pay the premium for delivery (to make sure the restaurant makes money and the driver makes money).

You may well faithfully adhere to this promise, but the reality is, most people simply don't know (and it would be generous for me to assume they would care even if they DID know).

So much of the GH/DD/UE model is reducing friction to drive transactions. Click button, throw some amount of money at the company, receive product. Just like Amazon.

Having to stay abreast of the news, the competitive landscape, the various companies' business practices, and then factor that all in when making an online transaction, is probably too much to ask of a consumer when the entire point of the service is not having to know or care too much about the details.

You could even argue one of the features of these services is abstracting away things that people don't WANT to know about- Tipping policies, labor practices, what the parking is like at the restaurant, how pleasant the staff is to deal with, how the owner's doing today, etc.

I'm with you- I almost never order anything delivery, I pick up my own orders on the rare occasion I takeout, etc. This whole delivery gig economy thing makes me pretty uncomfortable. But we're a rare breed. (and I'm not claiming to be better than most people; I order far too much from Amazon than I'd like to admit).


I don't get it, how would the restaurant be losing money from this behaviour? Isn't Grubhub paying the regular takeout price, same as if you order it yourself?


At face value non-partnered restaurants dont lose money, they simply get more customers (essentially, getting some of the services that partnered restaurants get, but for free since partnered restaurants pay fees for each order that goes through the platform)

However, in truth they pay damage in reputation. If the delivery company delivers food slow, or lets it get cold, then the customer will blame the restaurant. On top of that, unpartnered restaurants will naturally get slower delivery times because the order flow involves grubhub delivery people walking in and placing an order (or calling in), whereas partnered restaurants get point of sale systems integrated with grubhub's backend. They get less accurate delivery time estimations. They might pay a much higher delivery fee or service fee. All things add up to a worse customer experience.


People order every day from non Amazon, non Amazon Prime sellers on Amazon. My feeling is end users know what they’re getting into as long as they’re informed the restaurant is non partnered, and your bosses just need to take the 5m to come up with a brand.


I’ve heard many stories about people’s orders taking longer than 2 days to arrive[a] (sometimes even 5+ weeks). When asked, they say they ordered on Amazon and are upset at Amazon for it being late. After you explain that Amazon is also a marketplace, they understand why it’s late (it’s the seller’s fault), but they’re still upset at Amazon for not making it clear enough that it wasn’t going through Prime.

[a]: I.E. non-Prime purchases (ignoring the fact that Prime purchases can also just be late)


That indicates mostly a branding/communication problem and not something fundamentally wrong with the practice of layering services over other third-party services.


People don’t realize that Amazon Prime doesn’t promise 2 day shipping from the time you order. It’s 2 day shipping from the time they fill your order, which could be a week or two later.


It's a bit more nuanced than that. The best way to think of food delivery businesses funded by VCs is to think of them as payday lenders.

Some background reading: https://themargins.substack.com/p/doordash-and-pizza-arbitra...

Be sure to also read this insightful comment left by a former GrubHub employee: https://themargins.substack.com/p/doordash-and-pizza-arbitra...


Grubhub fucks up the order, the customer leaves a bad yelp/google review for the restaurant. (Because the customer was tricked into believing that they were interacting with the restaurant the entire time.)

That's why this is fraud.


Here's an excerpt from their October 2019 letter to shareholders. TL;DR - they're a public company and the markets told them they needed to keep growing in order to survive.

> For restaurant inventory, we will rapidly expand our recent pilots of putting non-partnered restaurants on the platform. For reasons we’ve discussed many times, we believe non-partnered options are the wrong long-term answer for diners, restaurants and shareholders. It is expensive for everyone, a suboptimal diner experience and rife with operational challenges. With that said, it is extremely efficient and cheap to add non-partnered inventory to our platform and it can at least ensure that all of our current and potential new diners have the option to order from any of their favorite restaurants now, even if it’s not the best solution. By leveraging non-partnered options, we believe we can more than double the number of restaurants on our platform by the end of 2020.

> At the same time, because we know that partnered relationships are critical to the long-term success of this business, we will be investing aggressively in our independent restaurant sales organization to support converting as many of these non-partnered restaurants to partnered relationships as quickly as possible and to take advantage of other innovations in the restaurant space, like virtual restaurants.

https://s2.q4cdn.com/772508021/files/doc_financials/2019/q3/...


> The restaurant can opt out of this, but they never asked for the service in the first place so it's kinda shitty. That's what this article is about.

If the driver places the order without making it clear to the restauranteur that they are the middleman company (UberEats, Doordash, etc.) then the opt-out clause is meaningless. You can't opt out of something you're never aware of.


yes - this is not "opt out", it's not even "default opt-in" like the telecoms got spanked for a few years ago, because they have no pre-existing relationship. It's fraudulent representation.


While I agree, restaurants do tend to pick up on this over time because (more issues with Place & Pay) people will complain to the restaurant about food being cold/slow not realizing that the restaurant isn't even involved in the delivery. Sometimes the delivery people make it quite obvious (e.g. drivers are given GH branded credit cards to pay with)


> people will complain to the restaurant about food being cold/slow not realizing that the restaurant isn't even involved in the delivery

By using their name in commerce, restaurants have a trademark.

People complaining to the restaurant about delivery shows that consumers mistook the Place & Pay vendor for the restaurant. This is proof that the trademark was infringed.

I don't see how Place & Pay could survive a court case, or even prolong one.


> restaurants do tend to pick up on this [fraud] over time

Fixed that for you.


> The restaurant can opt out of this

I was at the bar of a local restaurant when some delivery driver (not sure if GH) came in to pick up an order. The (super busy) server said "we told you we don't want to participate in this...", clearly exasperated at this happening over and over. This is a restaurant that does a lot of catering, where they set the terms/fees.

The driver started trying to "explain" how it's just the same as if he were a real customer and how would she know, etc. It was just gross.

This was a couple years ago.


That sounds like a wasted opportunity. Drop a note into the bag with the food. 'hey cut out the middleman call us directly the prices are better!'


Don't bother with food, just put rocks in there.


1 star review 'they put rocks in my food'


No food, just rocks.


I get that the restaurant owner was frustrated but this is like giving your waiter a bad tip because your food didn't taste good - you really think the driver has any influence on which restaurants get listed?


I assume they probably don't care about how a random scummy startup works; they want no part in it, including the rigmarole for opting out (if one exists).


No, but if you manage to identify all of these delivery people and refuse them service I bet that they unlist you.


That's a fairly unreasonable assumption. Odds are the only thing a human at corporate will ever see is "Driver John Doe could not complete delivery, customer complained" Unless purely by chance the same person just so happens to see the same issue with the same restaurant a few times, it's very unlikely that they'ed notice a trend, nonetheless correctly deduce its cause. The person in charge of making sure deliveries get completed is almost certainly not the person handling restaurant partnerships.

Even if someone does eventually notice and takes corrective action, this is far from an optimal way to do it. Given that the server is acting like the drivers should just know that they wanted to be unlisted, it wouldn't surprise me if the "we told you before" means all they did was tell drivers they wanted to opt out and never actually did the opt out procedure.


I'm going to start showing up at your house and ringing the doorbell once a day until you follow my opt-out procedure.


If you hire a different kid everyday to ring my doorbell and don't tell them you've been pestering me for weeks, I'm not going to take it out on the kid.


Note I said every. It is very unlikely that you could manage it. But if their success rate for a particular store. dropped to zero I suspect they would notice sooner or later.

I also never said that it is a good way to accomplish this. I'm just pointing out that refusing the driver can be a way to get them to leave.


Tell me something: if I'm sick at home, am I allowed to get a friend to go purchase take-out for me? And if I don't have someone who is able to do that for me, am I just supposed to starve?


To a first approximation, I can't really see why Place and Pay should be illegal. It's basically paying the neighbor kid to go pick up some dinner for you, writ large.

It "competes" with any delivery service a restaurant runs, but if the restaurant offers takeout at all, it's hard for me to see why the market should care who is doing the taking out.


To me it gets 'shitty' when they do this without disclosure. I have no problem with placing an order with GH and having them place the order for me, but when they masquerade as the restaurant and try to hide that from the customer is where the problem comes in.


And what happens when orders go wrong?

Last month the grilled chicken place gave me chicken which wasn't grilled. I called them (they have a national call centre), and the store manager called me shortly after, to apologise. Following day they sent me chicken.

Last week I was at a pizza place at night. An angry customer called, they got the other wrong. I listened to the store manager for about 4-6 minutes trying to explain that this was the 3rd-party service that got it wrong.

That service doesn't have an agreement with the store/chain, as they have their own delivery service.

Is the extra admin worth it? I don't think so. It's unethical behaviour from the tech companies.


We had the same experience with GH once(and never again as we canceled). The food arrived and was completely inedible. The restaurant sent out a vindaloo that was the most unnatural red color, like they had dumped a bin full of chili flake in it.

Grubhub pointed the finger at the local restaurant, and the local restaurant pointed the finger at GH for not specifying the level of spiciness. In the end the only way to resolve the problem was to do a chargeback because neither merchant would take responsibility. We didn't have the business relationship with the restaurant. So I'll never use GH for anything because when something goes wrong they absolve themselves of responsibility.

And I'm skeptical of any other company that acts as a base middleman like they do.


> the only way to resolve the problem was to do a chargeback because neither merchant would take responsibility

I assume that hurt GH?


Even worse, then the customer -- thinking the restaurant messed up -- writes a poor Yelp review for the restaurant, not understanding the game of telephone went wrong.


Is it a problem when your friend “misrepresents” that the order is for them? Or is it just a scale thing?


> To a first approximation, I can't really see why Place and Pay should be illegal. It's basically paying the neighbor kid to go pick up some dinner for you, writ large.

The service itself isn't illegal, but impersonating the restaurant is.


The possibly fraudulent part is that the customers is led to believe they're dealing with the restaurant.


This is the crux of the issue, especially when these services are happy to pass the buck when the delivery falls short and blame the restaurant.


I mean it's not fraud to blame your suppliers for problems that are the supplier's fault. It doesn't magically mean you're representing them. My local grocery store was out of tempeh because the factory they buy it from shut down due to a COVID scare. It doesn't mean that I suddenly think my grocery store is speaking as the supplier.


It certainly feels like fraud if that so-called supplier never agreed to be a vendor in the first place. If the line to check out at the grocery store was 2 hours long, you wouldn't blame the company who packaged the tempeh. If a mobile food order takes 2 hours because it requires someone to act as a proxy for the customer, then the blame should fall on the middleman service.


So I don’t really get the issue then. If my business is making custom computers and I buy parts from Microcenter then they’re my supplier whether there’s a business agreement or not. And telling my client that a part they asked for is sold out and so there will be a delay isn’t fraud.

It’s not at all my issue if my client is frustrated at Microcenter because of the delay and it’s not my job to protect their reputation so long as I’m truthful.

If my order is delayed because the driver is stuck at the restaurant waiting for my order because the restaurant hadn’t stated yet then that’s on them. Had I driven there myself I would be just as annoyed.

If my order is delayed because they can’t find a driver or there’s a problem with the ordering then that’s on the delivery company.


Apologies for the 2 day late reply, I forget to check my comments on HN far too often.

The issue isn't when a restaurant drags their feet with an order, it's when they don't know the order even exists until the courier shows up. So not only do you have to play a game of telephone with your delivery driver placing your order, but that order is only paid for & made once that driver get there.

None of this is clear from the apps I've used. There's no indication whether you're ordering from a restaurant that has a backend receiving orders in realtime or if it's a "place and pay" order. Customers will reasonably think the restaurant is to blame, when it could've very well been the fault of the driver.


because it doesn't SAY place and pay

it says I'm ordering from the restaurant.

it is lying to the customer by misrepresenting the price and performacne of the restaurant. When GH messes up, the implications are rarely for GH, they are for the restaurant which gets a bad review by the customer.


There can be a big difference in time between the people who pickup food and bring it right back to their place and the GH employee who has it sitting in their car for 30 min before he gets to your place. This can make the experience worse and hence hurt the restaurants reputation.


Or when the driver does multiple orders at once. That’s really upsetting. Because I’ll get a notification that the driver is approaching with my order (about a minute away), and then they proceed to drive past my house into a neighborhood 5-10 minutes away, and then come deliver my food 15-20 minutes after it was picked up.

If the driver is going to do multiple orders at once, I should be informed of this.


Perhaps there is a case to be made here around how reasonable person principle should be applied, because the defense can argue that only an idiot blames the company cooking the food when the independently-contracted delivery guy is too slow.

If they can hinge a case on whether the reasonable person can tell the difference, there's meat on the bones, but I don't see this case ending with Grubhub's business model being declared illegal (only with clarifications as to how to maintain the reputation protection aspect of trademark against the nominative fair use aspect of trademark).


No lawyer but demonstrating that "only an idiot blames the company cooking the food when the independently-contracted delivery guy is too slow" seems quite challenging, people leave reviews for all kinds of random, unrelated reasons.

I would never make a bet on peoples inability to be idiots.


Especially so when the independently contracted delivery guy impersonates the restaurant. A reasonable person will assume that the website restaurant-xyz.com connects them to the restaurant xyz and if they place an order, they are placing an order with that restaurant, not an independent contractor.


Hey, if it's just fast food why does the market even care who prepares it? How long till these food "delivery" services just capture all the addressable market masquerading as a bunch of uninformed, non-participating restaurants and make the food they deliver? Why are they leaving all this extra margin on the table?


Pizza is not fast food. And every pizza place makes their pies differently. They're not completely commodified, at least not for people ordering regularly.

As for actual fast food, while the process is optimized to the extent possible, that optimization usually involves the restaurants having their own supply chain of specific ingredients. Grubhub would have to gain access to the same ingredients to successfully impersonate chain restaurants.

What I can see them doing is just launching 100 different fast food brands selling the same food cooked in the same dark megakitchen, because why not, DDoSing consumer choice with fake brands is par for the course these days.


> Pizza is not fast food.

Some pizza is not fast food.


"The market" doesn't have opinions any more than "the environment" does.

Market participants all care for different reasons.

As far as assuming the business identities of "non participating" restaurants, that sort of thing has a long history - it is a favorite of various organized crime rings.

So in that sense, it does seem a natural fit for GH.


This is what Pasqually's/Chuck E Cheese does[1].

[1] https://www.businessinsider.com/diners-discover-that-pasqual...


They'd rather just run the last delivery step and suck up all the profits. Let the sucker restaurant owners assume all the cost of setting up operation and crafting a menu only to run it on no margins.


> It's basically paying the neighbor kid to go pick up some dinner for you

Except you know what your are doing. It isn't clear GH customers do.


I do appreciate your candor, however it is clear that GH engages in "kinda shitty" business practices.


FWIW, Postmates has been doing these "Place & Pay" orders since ~2012. A courier for Postmates was more akin to someone taking orders from an app like Favor/TaskRabbit than a purpose-built restaurant delivery service.


I think it shows courage for a non-PR employee to participate in a conversation like this.

Thank you!


reminds me of the pizza arbitrage article and discussion from a few months ago...

https://news.ycombinator.com/item?id=23216852

https://themargins.substack.com/p/doordash-and-pizza-arbitra...


why is DD not getting sued? Why is grubhub the one getting sued?


Why play an ad when you can provide bad service, and so ruin their reputation; like they might be with restaurants?

I stopped using Uber Eats and local alternatives here in South Africa, because I learnt on a day where they provided poor service; that they charge up to 50% more than the restaurant, all (3 services) have the exact pricing (collusion?), and still pay their drivers terribly.

They kill restaurants' delivery businesses, which although fragmented, offer better service overall, and are much cheaper + accountable if an order goes wrong.

GrubHub being opaque might be making people write off a lot of places. "I won't eat here, they got my takeout order wrong twice before".


Grubhub is taking a deliberate action misrepresenting the restaurant and that action is harming the restaurant (in more ways than one). I imagine they can make a successful case but it's going to be a long expensive fight.


If you want fraud/misrepresentation, Postmates puts up incorrect menus and accept orders on things the restaurant doesn't even make


This is a tough issue in the abstract, because information wants to be free, right?

But there seems to clearly be something like fraud going on, and the involuntary nature of restaurants perceived to be participating is... weird.


>Companies like Grubhub list restaurants on their site/app, but put the wrong phone number on it- one that goes to their own people instead.

Slice does something similar. They set up fraudulent websites for local pizzerias, so they can direct people to order through their app:

https://news.ycombinator.com/item?id=23346971


I solve this issue by never using Grubhub and calling restaurants directly. I'm here to support restaurants, not Grubhub.


The complaint of many is that Grubhub gets its own number listed on many services such as Google Maps, so that you are tricked into thinking that their number is the restaurant.


> That's clearly some kind of fraud or misrepresentation.

I don't really understand this point of view.

They're saying you'll get food from restaurant X. That's exactly what you do get, at the price you agreed.

I can't conceive how that's fraud or misrepresentation?


When you click on a number to call the restaurant and not the restaurant answers it is fraud if the restaurant did not agree on that.

Doesn't matter if you end of providing the exact same service.

What if I picked up calls going to Apple and all I did was transfer you to the correct person. You are still getting the same service if you called Apple directly but its not legal because Apple did not give me permission to impersonate them.

Or what if a private entity picked up your call to 911?


Correct. Also imagine if I, acting as this middleman, captured some data about you (say your phone number) before patching you through to Apple and used that to build a database. Are folks okay with that? I'm certainly not.


>What if I picked up calls going to Apple and all I did was transfer you to the correct person. You are still getting the same service if you called Apple directly but its not legal because Apple did not give me permission to impersonate them.

You're missing the part about how GrubHub, et. al don't just pass you along, they charge 12-30% "commission" just for forwarding the call -- and they set up the fake number just so they could do so.


Affiliate links work the same way. Are those also fraud?


>Affiliate links work the same way. Are those also fraud?

IIUC, Affiliate marketing is when an online retailer pays you a commission for traffic or sales generated from your referrals.

That's not fraud or misrepresentation.

In the case of Grubhub, et. al, fake phone numbers, they aren't recommending a restaurant. They are claiming that the phone number is the restaurant. Those who call that number aren't clicking an ad because the "affiliate" promoted it. They are calling that number because they'd already decided to contact that particular restaurant, but were redirected to another entity -- with a monetary interest that harms the restaurant -- that doesn't disclose their third-party status.

And that's certainly at least unethical, if not outright fraud.


No, because affiliates are participating in an affiliate program with the consent of the business.


The phone number thing is also only affiliated businesses. There would be no way to charge them if they weren't.


>The phone number thing is also only affiliated businesses. There would be no way to charge them if they weren't.

Charge them for what? When a customer uses the GrubHub site/app to place an order, they are explicitly choosing Grubhub to service that order.

If I choose to call a restaurant rather than use the GrubHub site/app, I'm explicitly choosing to deal with the restaurant directly. As such, GrubHub isn't entitled to an "affiliate referral" fee.

When a website and/or phone number claims to be an entity that it is not, and does not disclose that fact to the customer, then charges a fee based on that deception, that's fraud.


You're searching on Grubhub and then calling through their app or website. If that isn't a referral, I'm not sure what is.


>You're searching on Grubhub and then calling through their app or website. If that isn't a referral, I'm not sure what is.

No. You're searching DDG or Google or Bing and a website for the restaurant comes up.

It says it's the restaurant. It has the menu and the phone number. But it's not the actual phone number of the restaurant. Nor is the website set up or endorsed by the restaurant.

Both are owned and controlled by a third party (in this case, GrubHub) which claims to be the restaurant, and by virtue of SEO-spamming the site to the top of the search results, you get that site instead of that of the actual restaurant.

I'm trying to decide whether or not you're ignorant or just being deliberately obtuse. Care to settle the controversy?


My understanding of the phone numbers is different than how you're saying it works.

The calls are forwarded so that Grubhub knows about them (and can get commission), but the customer that still talks to the actual restaurant.


Here they’re going beyond that and saying, “Bill’s Eatery. Phone number: 555-...”, which a reasonable person would think was the restaurant’s number, not a grubhub number.


GrubHub is taking over the relationship between the customer and the restaurant without either of those parties being aware of it. This is clearly a deceptive practice, and now GrubHub influences the customer's perception of the restaurant. Examples of conclusion(cause):

* That place is expensive (GrubHub sets the price which can be higher than the restaurant) * That place screwed up my order (GrubHub's game of telephone made an error) * That place is so slow (The now multi-step transaction slowed down the process)

>> They're saying you'll get food from restaurant X.

They're actually failing to say this, so the reasonable interpretation is "We ARE restaurant X" which is the fraudulent representation at the heart of the case here.


WHat if the delivery person that grubhub uses is useless and the regular delivery person that Restaurant X uses isn't.

YOu can end up getting poorly delivered cold food from GrubHub and make restaurant X look bad.

Restaurant X might end up having a load of disappointed customers, reduced custom and have no idea why. They dont know there is actually now a middle man they didn't agree to between them and their customer.


You’re attacking the first sale doctrine here though if you think about it!


First-sale doctrine doesn't allow you to impersonate other companies. Nobody is saying Grubhub can't resell meals, they just have to be clear it's them who are doing the selling.


> You’re attacking the first sale doctrine here though if you think about it!

I can sell a Mac but can't hold myself out as a representative of Apple.


We're talking about cooked food here though, not sure if it applies


Well I think first sale is IP so I didn’t mean it literally but I don’t get why anyone would be advocating for allowing manufacturers to be able to control what you can do with your property.

When it’s Apple suddenly everyone argues the opposite!


First off, food is different than technology. There are safety issues that are regulated differently. Can you think of any instances in the prepared food space that support your argument?

Second, I think the impersonation is the biggest issue. At a minimum, that sounds like trademark infringement; at maximum, that sounds fradulent.

IANAL and am just a dog on the internet, so grains of salt the size of Jupiter. But I don't think the comparison to non-prepared food industries are at all relevant.


> They're saying you'll get food from restaurant X.

That's not what they're saying. They're saying that you're contacting the restaurant, which you're not.


Because when people don't get exactly what they want, they blame the restaurant instead of the Grubhub employees who messed up. The restaurant loses business, grubhub makes a quick buck.

It's at the very least a trademark violation, this is exactly what trademarks were set up to prevent.


You’re allowed to use a trademark to factually describe a product. If I have legitimately bought an iPhone and I’m offering to resell it to you I can use the iPhone trademark to do that.


You're not, however, allowed to list your phone number as the number for the Apple Store and start taking orders on their behalf.


Because they fail to make clear that you are ordering from them, not the restaurant. With all that implies about responsibility about pricing, if there is an issue with the order, etc.


This would be the most awesome troll of SV startups. Own the directory of help for all SV tech companies and create an AdSense for that.


Unless I'm missing something, the substantive difference hereis that GrubHub is still ordering from the restaurant that the customer is ordering from.

Your comparison of pretending to offer GrubHubHelp but then going to competitors is like if I ordered McDonalds, and you brought me pasta.

I don't see anything intrinsically wrong with what GrubHub is doing, but I could see them needing to clearly note the relationship. There are lots of personal shopping/delivery services which phone in orders and go pick something up without having a pre-existing relationship with the restaurant.


> I don't see anything intrinsically wrong with what GrubHub is doing, but I could see them needing to clearly note the relationship. There are lots of personal shopping/delivery services which phone in orders and go pick something up without having a pre-existing relationship with the restaurant.

The problem is that Grubhub is not asking permission to list the business on their site and it borders on abusive behavior. The said business may have an ordering system already or a phone number to order because they simply don't to share a hefty cut with Grubhub. Why they don't simply ask for permission? Because some restaurants wouldn't give it and Grubhub forces their hand. I think this is what this lawsuit is about.


> The problem is that Grubhub is not asking permission

But nothing says they have to as far as I know? Do you have to ask permission from an author before you resell a book you own?

> because they simply don't to share a hefty cut with Grubhub

They don't have to share a cut in this case. The restaurant still gets the full retail price that they set. Grubhub marks up on top of that or takes it as a loss as I understand.

> Why they don't simply ask for permission?

They don't want to. Do they need any more reason than that?


Yes they have to ask for permission to present themselves as an agent of the company, which they do when they present their own phone number as the restaurant phone number. So I imagine the lawsuit will have many legs to stand on.

This is business, which has many rules. Its not just 'do whatever you like as long as it makes money'.


>Yes they have to ask for permission to present themselves as an agent of the company, which they do when they present their own phone number as the restaurant phone number. So I imagine the lawsuit will have many legs to stand on.

Except they don't. In fact, they register domain names and set fake websites that say they are the restaurant when they're not. They set up phone numbers that route through Grubhub/Seamless and charge their outrageous commissions even for pickup orders.

While there are many places where delivery services are useful, in places where delivery was already ubiquitous (e.g., NYC), the high commission fees and deceptive practices have forced many low and mid-priced restaurants to close because orders through these services take all their profit and a bunch more, making businesses that had been profitable for years or even decades unprofitable and forcing them to close their doors.

Aside from reducing the number and diversity of restaurants, sucking profit out of such transactions that are way beyond any value provided will also end up costing consumers (that's you) more too.

cf: https://www.theverge.com/2019/6/28/19154220/grubhub-seamless... https://www.theverge.com/2020/5/15/21260609/grubhub-phone-ca... https://www.eater.com/2019/8/6/20756799/yelp-grubhub-phone-n...


Are they claiming to be the restaurant? Or just saying you can phone this number and get the advertised product, which is true?


>Are they claiming to be the restaurant? Or just saying you can phone this number and get the advertised product, which is true?

Here's an example. The site linked (menupages.com) is owned by Grubhub/Seamless. The telephone number is not the actual phone number of the restaurant, and attempting to order through this site gives no hint that you're using Grubhub/Seamless.

https://menupages.com/tropical-sensation/953-amsterdam-st-ne...

While search engines seem to have backed off putting GrubHub's fake websites near the top of searches, this has been a widespread practice by them for a long time[0]:

"The company has registered a lot of fake websites. GrubHub has registered either a bit more than 23,000 websites, according to the New Food Economy, or 34,000 over the last nine years, per the New York Post’s report. The last domain GrubHub registered was in May, when the Post detailed the company’s practice of creating phone numbers for restaurants in order to drive up its own sales."

[0] https://www.grubstreet.com/2019/07/everything-you-need-to-kn...


> Yes they have to ask for permission to present themselves as an agent of the company

That's not necessarily true (yet), that's literally what this legal case is about.


No, that is already true under existing law. Presenting yourself falsely as an agent of a company, and profiting from that, is fraudulent misrepresentation.


In your book example, I am buying a book from you. A better example would be you buy search ads for the author's name, create a website with a button "Contact the author" which goes to you, and then you sell me the book.


And I’m buying the food from GrubHub who buy the food from the restaurant. Like if I buy a book from a bookshop who buy it from the publisher.


> A Like if I buy a book from a bookshop who buy it from the publisher.

No it is not the same, because there is no business agreement between Grubhub and the restaurant here unwilling and unaware restaurants aren't "kitchens" working for Grubhub.

Grubhub wouldn't dare pulling that stunt with McDonalds or BurgerKing and list their products, use their corporate identity and sandwich pictures without an agreement or striking a deal before hand.

They are preying on smaller restaurants because they know it's harder for the little guy to fight back, it's the very definition of predatory behaviour. You just don't see anything wrong with that.


> because there is no business agreement between Grubhub and the restaurant

You don’t need an agreement to resell product that you have purchased.

Or is everyone on HN now suddenly in favour of scrapping the first sale doctrine and allowing manufacturers to control if you can resell your property?

Madness. If GrubHub are able to buy the product they should be able to resell it.


> You don’t need an agreement to resell product that you have purchased.

You are ignoring 80% of my argumentations to make your sophistic point, and then complaining "about everyone on HN", you're just being disingenuous.

We're talking about prepared food here (and potentially fraud), not books. And you talk to me about "first sale doctrine" in relation to prepared food claiming everybody here is ignorant?


Approximately nobody thinks that grubhub shouldn't be able to resell the food.

However they should be very clear that this is what they are doing, and that issues with the food are now their responsibility.

We wouldn't be having this conversation if GH/Uber/etc. were clearly advertising "Call us at xxx-xxx-xxxx, we'll order takeout for you and deliver it".

If they pick up the phone when you call and say "This is grubhub, how can we help you?" we'd be in different territory.

As soon as you make it ambiguous about who you are ordering from, this is an issue of misrepresentation. Even if it does apply, first sale doctrine is a red herring.


The difference is you know you're buying from the bookshop and not from the publisher. And the publisher knows the bookshop is selling the books under its own name, not free-riding on the publisher's name and brand recognition.

Lots of people have already explained this to you on many different comment threads in many different ways.


Why should they need to ask for permission?

Businesses operate in the public sphere; they have physical addresses and show up in business listings, so their locations and info aren't private. The use of the logo for commercial purposes could be a concern; I could see an argument perhaps saying that the businesses should have more control over their trademarked property in the sense that there could be confusion of whether they're working with Grubhub (they're certainly not endorsing Grubhub).

But apart from that, use of the business's information (including name) to describe what restaurants Grubhub will pick up from is nominative fair use. If I make a list of "businesses in my home town," McDonald's can't use trademark law to keep their name off my list. Same deal here.


Again, it’s misrepresentation: if they had a website and phone staff who made it very clear that they were unaffiliated with the listed business they would not be getting sued any more than a travel agent gets sued for buying airline tickets.


The biggest issue, that we have around here, is that GH, and a few other outfits, SEO-spam their listings, sometimes, using branding elements taken directly from the restaurant's sites, and force themselves to the top of searches.

If there are any issues with the order, I guarantee that GH does a quick dash for the door, leaving the restaurant holding the bag. The problem may have occurred anyway, but the customer was actually GH, not the person who called GH.

GH made a sale, got a commission, then didn't have to stand behind their sale.

It may not be illegal, but it is not-nice.


It’s still misrepresentation - would you really be okay with me putting up a bunch of pages pretending to be you with your name, photo, CV, etc. on the claim that’ll I’ll pass along any messages?

Now remember that GrubHub is doing this to make money, so I’ll take 30% off of all receipts before I kick the actual work over to you.

Oh, and GrubHub and UberEats like to do this to see which markets are the most profitable so I’ll be using your customer’s questions and orders as the basis for the ghost shop which will be undercutting you.


The lawsuit [1] lists the following Factual Allegations:

• Gruhub tells consumers it’s working cooperatively with restaurants

• Grubhub decides to add unaffiliated restaurants to its website and mobile apps without the restaurants’ permission

• Grubhub’s unauthorized use of restaurants’ names and logos misleads consumers and harms restaurants

• Restaurants have good reasons for choosing not to work with Grubhub

◦ Grubhub knows restaurants don’t want its business and tells drivers to disguise their affiliation with Grubhub

◦ Consumers continue to believe restaurants on Grubhub are working cooperatively with Grubhub

◦ Customer confusion leads to poor experiences that hurt restaurants’ hard-earned reputations

◦ Grubhub diverts and impairs demand for local restaurants

• Grubhub knows it is harming restaurants and uses that harm to force restaurants into unwanted partnerships

[1] https://www.classlawgroup.com/wp-content/uploads/Grubhub-Cla...


Sounds like an open-and-shut case, but GH has the backing of SV lawyers so chances are it'll drag on for 3 years or end in settlement.


Interestingly, the damages can be calculated and definitely add up.

Restaurants spend a lot of time and effort to build up loyal, lifetime customers that are created by giving them three exceptional experiences in a row. There is a lot of research on getting to three exceptional experiences in return for a lifetime customer. Those exceptional experiences require investments in staff and training and take a long time to pay off.

Having GrubHub break that effort through misrepresentation they are destroying the lifetime value of those customers. If you apply that math to slightly more premium venues, GrubHub is easily costing restaurants hundreds of thousands in revenue through lost lifetime value.

Restaurants are complex, fragile businesses, and this practice damages them at the core of their business.

Will be interesting to see how this plays out in court.


A counter point is that an individual is free to hire someone to go and pick up food from a restaurant on their behalf and it does not make any difference to the restaurant.

I suspect that what restaurants fear, though, is that Grubhub is trying to grab as much marketshare as possible then once they are in a position of strength they'll go and demand a commission from the restaurants, or else...


A counterpoint is that if you hire someone to order and pick up food for you, and they place the wrong order, you won't blame the restaurant for your assistant's mistake.

GH is pretending to be the restaurant, so you get mad at the restaurant, not GH, when your order arrives late/cold/wrong. The restaurant didn't agree to this representation and you, the customer, weren't informed of it either.


  an individual is free to hire someone to go and pick up food from a restaurant on their behalf
They are commercially advertising names, logos, menus, etc not taking random orders from people.


I think that this is a red herring unless they are doing so in a way that may make people think that they are the restaurant instead of an independent delivery agent, although the restaurant do allege that Grubhub is misrepresenting themselves.

But yes, in principle they can get into trouble for using trademarks and logos without authorization (menus are fair game), although I suppose it is fair use to mention the names of the restaurants they can pick up food from. Going after them for that shows that they are not doing anything unlawful by running their intermediary service if this is the only thing the restaurants hope might stick.


That's not much of a counterpoint. In isolation, I would question whether this reply is aimed at the wrong comment as it doesn't seem to counterpoint much of anything in the parent comment as far as I can tell. It's not about someone coming to pick up food at a restaurant.


> Grubhub decides to add unaffiliated restaurants to its website and mobile apps without the restaurants’ permission

My counterpoint is that I don't believe that there is anything wrong with that or that permission is needed. Of course as long as there is no misrepresentation, which may indeed be an issue here.

If you think otherwise I'm happy to hear your argument...


DoorDash does this too: https://news.ycombinator.com/item?id=23216852

In many cases, it can hurt the reputation of restaurants. Maybe your food doesn't travel well, or you don't have the capacity to handle orders beyond what you have physical seating for...


Absolutely! Bad reviews because of the delivery service impacts the said restaurant. This type of middleman service should be optional IMO.


A lot of companies do things like this where they pretend to be another company to scoop in business as a middleman. Recently googled a tradesperson and called the number on the top result that came up. It quickly became clear that I wasn’t talking to the outfit I was trying to call but someone trying to insert themselves in the middle and collect a fee. When I grilled them it became clear what was going on.

I eventually hung up and found a new number which put me in touch with the company directly. When I told them what happened they were like “yeah (insert name of one stop shop for home repairs) has been doing this... we have nothing to do with them but they keep trying to pretend we work with them and put out adverts under our name.” Super frustrating and I can sympathize with the restaurants where the same sort of thing seems to be happening.

The likes of Google could of course police this a lot better but they’re happy to take the money for the ads.


Trading under another brands name -- by listing them as an ordering place with an unofficial dark kitchen associated in your app -- seems like the most egregious form of trade mark infringement.

Why aren't GrubHub concerned about the legal reprecussions of this?


>Why aren't GrubHub concerned about the legal reprecussions of this?

When is the last time a company was SERIOUSLY threatened by the repercussions of doing something illegal in the US? When was the last time a company was fined/sued out of existence for something they were doing to average people?


All I know is I’m still waiting for my Equifax settlement check. Any day now, I’m sure!


I got a mortgage in 2005. Company had problems with fraudulent stuff and class action suit brought against them. Outside of whatever their behavior was that triggered the class action, they had poor service to me as an individual, so I'm not terribly surprised they probably cut many other corners (ethically/legally/etc). Anyway... I got my class action settlement checks yesterday. $71 and $74. w00t.

EDIT: this was more in reaction to "still waiting on those Equifax checks" comment. Just give it another 10 years...


I agree that class actual settlements are Usually underwhelming, but were you specifically (even in expectation/probabilistically) hurt by those wrongs, and if so, what do you think is the more accurate figure for the harm you faced?


I don't know if I experienced direct harm from their actions. Certainly they had a culture of being ... not good, and that probably filtered down to customer service and processing, which hosed me over multiple times in the short time I had used them. They ended up costing me hundreds of dollars in fines and late fees because they mishandled escrow (and I was told it wasn't just me, they mishandled a lot in my county), so... ~$140 15 years later is probably not all the useful. A more accurate figure may have been, let's say, ~$1000 15 years ago, to cover the late fees/penalties along with my own time/stress figuring it all out (multiple trips and calls to county office, time away from work, etc).


>> class actual settlements are Usually underwhelming

not for the firms that bring them: millions in fees & billing, ranging from the upfront certification efforts (riskier) to the payment & settlement (at this stage, risk-free and very lucrative)


I preface this by saying I’m not ok with how this is. I’m just explaining the reasons “class action” lawsuits are the way they are.

----

That’s because the purpose of “class action” lawsuits isn’t to provide relief to the harmed class (despite what many think). It’s to punish the company (financially) for their wrongdoing. It doesn’t always work out that way,[a] but that’s the idea.

The reason (supposedly) for not getting relief is that the injured class members can still file their own cases against the company with their own lawyers. But then you need to pay out-of-pocket for that lawyer and hope the judge not only sides with you, but awards cost in addition to the claimed damages.

Of course, there’s always the perverse incentive of the lawyers working for the class to take a bigger cut for themselves (“why would I take a $5 million payday when I could get $15 million instead?”). There’s also a push to settle because then they work less, but still get their payday.

[a]: Especially if the payout is less than they made harming the class


Congrats on the free money. It's pretty well known class action suits serve only to enrichen counsel, and in rare occasions may have a side effect of marginally disrupting a business's cash flow.


Heh, in the state I used to live in there was a huge controversy regarding a power company, corrupt politicians, amassive infrastructure project failure who's cost was passed on the the consumer, and strange mergers . People were promised compensation and the the three cent checks eventually trickled in.


Same here, my area's energy company increased their rate sto build a new nuclear plant, spent some of the money, and then never finished it... Years later I think I got a check for $2.67 for that.


Curious now if we lived in the same area lol or if this is just some sad coincidence.


I know there's been a lot of criticism of the details of the settlement, but Purdue Pharma was sued out of existence by the DOJ last week.


I don't know if I would count that as any sort of a win, given how the primary owners acquired $11 billion, then were fined only $225 million. I guess crime pays out at 98%.

https://arstechnica.com/science/2020/10/sacklers-who-made-11...


Purdue actually paid 8 billion out of 11 billion profit. That seems reasonable as tons of people using their drugs did have a legitimate need.

The 235 Million in personal civil liabilities PLUS their losses from owning so much of the company.

https://www.justice.gov/opa/pr/justice-department-announces-...

> 8 billion payout on 11 billion profit. That seems reasonable. Not all of the people using their drugs were being prescribed without good reason. > Purdue Pharma has agreed to plead guilty in federal court in New Jersey to a three-count felony information charging it with one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute. The criminal resolution includes the largest penalties ever levied against a pharmaceutical manufacturer, including a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture. For the $2 billion forfeiture, the company will pay $225 million on the effective date of the bankruptcy, and, as further explained below, the department is willing to credit the value conferred by the company to State and local governments under the department’s anti-piling on and coordination policy. Purdue has also agreed to a civil settlement in the amount of $2.8 billion to resolve its civil liability under the False Claims Act. Separately, the Sackler family has agreed to pay $225 million in damages to resolve its civil False Claims Act liability.


They made off with at least $3 billion in profit, are responsible for (at minimum) the deaths of thousands of Americans, and will ride off into the sunset with their billions.

The DOJ delivered a slap on the wrist just in time for the election so that they could claim a win on the opioid crisis.

I don't blame people in this thread for having zero confidence whatsoever in the "justice" system.


Of course they shouldn't profit from people they've harmed.

Is it okay to profit from the other people they've helped?

In any case Rhodes Pharmaceutical was started in 2007 by the Purdue family. It makes opioids too and should be shut down.


I think the outrage around the Sacklers and the money they kept from sales of opioids is justified.

That said, I think you're arguing that if Purdue Pharma were to continue pushing opioids and the Sacklers continued to profit handsomely, that would be equivalent to them stopping now? Stopping them now isn't any sort of win?


A judgement against a corporate entity after the owners have already cashed out is analogous to a judge ordering the return of stolen lemons, but the thief gets to keep the lemonade she's already squeezed out of them.


I don't think being left with 3 billion in profit is being sued out of existence.


It happens all the time, but usually to small businesses and startups, not established businesses with lots of money and lawyers.


I believe there's been for profit colleges that were sued out of existence


Because "justice" in the US is not about who's right and who's wrong, it's about who's got the most money and resources to pursue a lawsuit.


At some point the question of "who is actually right, and who is actually wrong" has to be answered through the work of people. Those people have to be paid. For criminal work, that's taxpayers footing the bill -- sometimes just for one side. For civil, the government provides a judge and the rest has to be paid for privately. It's not awful, but it can be so inefficient that it can break down due to resource exhaustion, or worse, a vector for abuse.


How many mom and pop restaurants do you know of who have the extra financial capital to find a lawyer to sue over an issue like this against a company as well-funded as grubhub or doordash?


>How many mom and pop restaurants do you know of who have the extra financial capital to find a lawyer to sue over an issue like this against a company as well-funded as grubhub or doordash?

It's much, much worse than that. many of those restaurants thrived for years on 5-10% profit margins. Grubhub comes along and charges them 12-30% "commissions" just for forwarding orders and processing credit cards.

Forget about paying a lawyer -- many of these restaurants are out of business because of this.


What's the mechanism that forces restaurants to partner with these food delivery services? Threat of competition if they don't?


>What's the mechanism that forces restaurants to partner with these food delivery services? Threat of competition if they don't?

The mechanism is the ubiquity of folks using "apps" instead of contacting restaurants directly.

It used to be in NYC that every time a restaurant made a delivery, they'd leave paper menus for the residents.

Now, you either go through an "app" (read: an inferior interface to a website) or a search engine to find restaurants.

Aside from the fact that a low/mid-priced restaurant likely doesn't have the tech expertise to set up an online ordering platform, or the financial resources to purchase a point-of-sale system that includes such functionality or to contract with a developer/hosting provider to do so, getting on these sites may seem to be the only way they can maintain their business.

And since GrubHub, et. al use SEO spam to get themselves at the top of search listings, have contracts that forbid restaurants from charging less if orders don't use them, and then take all the profit (and then some) from the bulk of transactions, the deck is stacked against such restaurants.

I suppose you could argue that if a restaurant can't compete in the market, it should fail. And most do. The average lifespan of a restaurant is just five years, and the vast majority fail within one year[0].

But those aren't the restaurants I'm talking about. I'm talking about neighborhood institutions that have been open for decades being forced to close because all their profit and then some is being taken by services like GrubHub that aren't even providing delivery services, just listing on their site (which runs from ~12-30% on every single order).

The insertion of the middle man here, taking up to a third of the revenue on every single order which provides just a listing service (they actually charge the customer for delivery service if the restaurant doesn't provide it -- not the norm here in NYC), has put many wonderful restaurants out of business.

This increases prices, reduces the diversity and choice of cuisine and quality, without providing any value, except in listings and credit card processing.

[0] https://www.usatoday.com/story/money/restaurants/2018/08/09/...


Seems like part of it is that at least GrubHub seems to go ahead and do it anyway.


How many lawyers do you know who would love to represent the restaurants in general as a class, that they may make class-action-lawsuit money?

Well, I don't know any either, but if there's a good solid case then it only takes one.


Isn't that exactly what the OP says is being done?


breaking laws/operate in the gray area is often touted as "silicon valley disruption" from AirBnB, Uber...etc.


Mind elaborating on where the dark kitchen comes into play?


[flagged]


It’s not a partisan thing, when the Republicans are always bleating about capitalism being the “one true way”. Do you really think this type of thing wouldn’t be happening regardless of which party is in power?

Greed transcends politics. It takes extreme mindfulness to acquire wealth and not end up corrupted by it in some way.


>Because the company is firmly in Team Blue, and they control the House right now.

Yeah, those demorats are completely in the pockets of GrubHub, et al.

Which is why the demorat Senate majority and the demorat Executive Branch didn't take up the anti-trust bill and request for investigation that the patriotic Republicans, who have been shut out of all decision making by the ruthless demorat Senate majority have been trying to protect the American people. Oh, wait. How could I have gotten that backwards[0]?

[0] https://www.klobuchar.senate.gov/public/index.cfm/2020/5/klo...


I really think this abusive behavior practiced by big companies extends beyond party lines and would have a hard time believing otherwise. If it only were that easy and these type of abuses would simply be caught when the other party takes control of the house..


> I really think this abusive behavior practiced by big companies extends beyond party lines and would have a hard time believing otherwise.

How many on-demand services aren't in the Bay Area, Chicago, or NYC?


More for sure but that has to do with density not party lines. Again I wish it were that simple but corruption doesn't know party lines.


Prosecution is handled by the executive branch, not the lower house of the legislative branch.


Except that what they're doing is just barely legal, so it would require legislative policy changes.

But on that note, if someone from the Executive branch wants to try to prosecute GrubHub for this, I'm all for it. Highly unethical at the very least.


I'm no expert on this particular issue, but I would guess that the FTC has the authority to impose regulation against things like this. If so, then, if everything were functioning well, there wouldn't necessarily be any need to change laws.

It's also possible that it's already a tort, or can relatively quickly be established as tort by the outcome of a lawsuit like this.

In general, Congress isn't where you go first; Congress is where you go when all else fails and you're willing to take your chances putting a decision like this to a bunch of people whose paychecks are, to an approximation, paid by the companies with the deepest pockets.


If I sell you some 2nd hand Lego bricks, the same logic aplies.

I am not affiliated with Lego, yet the thing I am selling was legitimately made by Lego a while ago. When I describe what I'm selling, I clearly say I am offering lego bricks for sale.

Here grubhub seems to be doing the exact same thing with food. Hard to see how one can be illegal while the other isn't.


No, this situation would only be analogous if you listed yourself as “Official LEGO(TM) Store” and had a link to LEGO.com on your Amazon profile, and you had “contact LEGO Sales by phone” but the listed phone number was actually your private line, and LEGO did not give you permission for any of this.

The obtuseness in these comments is really something else.


If you register officiallegostore.com, put the Lego logo front and center, and start selling Lego, used or otherwise, I can assure you that you will get in trouble.


At the size / scale of grubhub, it will always be cheaper to do unethical things for money now versus settling out of court later.

Knowing someone that used to do sales at grubhub, this doesn't surprise me at all. The company that person currently works at is probably doing the same, because if you can get away with it, why not? Worst thing that happens to the people who put those policies in place is they find another job.


i'll go even further... the other thing about it is that the owner has to have the money is order to bring the lawsuit to court. also, depending on how backed up the courts are, it could be years before the case brought into court by which time the owner could be out of business.

it really is horrible how screwed up our civil court system is.


Are the courts "backed up", or is the process of discovery and everything else leading up to a trial/judgement just a necessarily long one?


the point i was trying to make is that it for any reason, the case can be delayed in getting to court. i've personally seen cases take 10 years to finally get to court only to have the case dismissed.


I have a friend with a small restaurant business and learned about some of the sketchy things grubhub does . Some people order food, my friend's business delivers the food and a few hours after the food was delivered the order is cancelled. Grubhub refunds the money to the person who ordered and refuses to do absolutely anything about it for the business. He filmed on his phone when dropping the food, handing it to a customer and Grubhub shrugs their shoulders. They suggested he creates a a black list of numbers+addresses to refuse orders but that isn't fool proof, the sketchy customers use different numbers and order at a slightly different address and wait outside for it. They may add numbers to a black list as well but some of these bad customers use burner phones.

So a big problem with these middleman services is that control is completely ceded to the middleman and one can't really do anything about it. It is extremely frustrating for business owners, but probably not as bad for the customers. This type of competition a la Grubhub/Amazon will kill a lot of legitimate business and create their own generic services instead. It is a subjugating experience and business owners don't feel that they are control of their own destiny. It saddens me that this trend doesn't seem to get any better but only exacerbate over time.


They should lose their ass for this. It hurts the reputation of small restaurants when the food isn't good and it might not even be their fault. Shouldn't there be some kind of health code rules for food delivery?


The “place and pay” orders the lawsuit describes are new to me. I’d always kinda held the position that saying “We’ll deliver you food from Lou’s Diner” doesn’t necessarily imply you’re affiliated. But if Grubhub is telling drivers to disguise themselves because restaurants wouldn’t accept the order if they knew it was from Grubhub, that seems pretty clearly unethical.


The legal basis of the linked class-action is the Trademark Act of 1946, and the claim is that Grubhub has infringed on the claimants' trademarks by presenting itself as acting in cooperation with the affected restaurants, even though it has actually been acting unilaterally.

So the claim is less a middle man saying "We'll deliver you food from Lou's Diner", and more putting out ads for Lou's Diner with their own phone number in and delivering from Lou's Diner


In a similar situation, the alcohol delivery service Drizly received a ton of backlash for buying ads on the brand terms of a Black-owned wine shop in Boston that they had no affiliation with. When buyers understand how platforms do this, they are pretty clear that they don’t agree with it.

https://www.instagram.com/p/CGpUGbuAc-q/?igshid=1u5yor18vch0...


Tbh I don't see a major problem with this. If folks want to pay someone (Grubhub) to go pick up food for them, why should the restaurants be allowed to say no?

> Food may not travel well.

Fair point, but if the customer still wants it, that's on them.

> But that may lead to unfairly low ratings for the restaurant.

If (say) 30% of the restaurant's patrons choose to get the food via food delivery, why shouldn't those folks' ratings of the food be factored into the restaurant's rating?

> If people want food and the restaurants doesn't want to support delivery apps, then folks should respect that and visit the restaurant in person.

Many people aren't able to visit in person, either due to time constraints, mobility constraints, COVID precautions, or other reasons.

> Restaurants may not be able to handle the additional load placed on them by these services.

I empathize with this one and don't really have a rebuttal.

> Delivery services sometimes make their own websites and phone numbers more prominent than the restaurant's own, deceiving people into using them instead of going straight to the restaurant's site/number.

I agree, this is a horrible tactic and aggregators like Google and Yelp should work to prevent this.

------

These are just the opinions of me, a privileged engineer who has little knowledge of the restaurant industry, so I definitely welcome any criticism to my points and am certainly open to changing my view!


>> But that may lead to unfairly low ratings for the restaurant.

> If (say) 30% of the restaurant's patrons choose to get the food via food delivery, why shouldn't those folks' ratings of the food be factored into the restaurant's rating?

If the restaurant has chosen to focus on dine in service because that generates the much of their revenue (alcohol sales, desserts, etc.), it would be a shame if their ratings were damaged by delivery customers. People check ratings/reviews before dining out, so having a bunch of bad reviews due to unwanted delivery could really affect dine in traffic as well. It's not fair to expect the restaurant to cater to these delivery customers when they not actually chosen to run a delivery service.


This seems like a problem that the review companies are responsible for—coalescing reviews into a single, no-context scalar—moreso than it is the intermediaries' fault.

The original comment stands. If a substantial portion of people are ordering takeout from intermediaries, it's reasonable that when one of those customers checks the reviews, they contain relevant info from others who've ordered the same way and shared their thoughts. Getting in a huff because of that is akin to trying to silence people talking about you because you don't like what those people are saying and/or how other people are responding to it.

If review sites are unfairly mixing irrelevant info (presenting takeout experience using intermediaries to customers who are looking exclusively to dine in), then the ire should be aimed at those sites and, ultimately, the dine-in customers who let irrelevant info dissuade them from going through with their order.


GrubHub is a review company though. Part of their supposed value proposition is that they act as a marketing platform, and the restaurant reviews are a large part of this.


You seem to be intentionally misunderstanding and/or misrepresenting things, including context. GrubHub is a food delivery company.


If the food doesn't travel well, maybe don't offer it for take-out? I'm just as likely to ding a restaurant with a bad review if I pick up food and don't like it as if GrubHub delivers it and I don't like it.


It's not so much as it doesn't travel well, it's that the delivery driver doesn't deliver it well. I've waited over an hour for delivery food before. Actually, 45 mins to over an hour is typical no matter the service I use, so I've stopped using it. The model is that the food sits out and gets cold because the delivery driver doesn't get there in time.

Instead, I order takeout. I call the restaurant directly, with their actual number and not some phishing line from a delivery service, and place an order. I immediately leave, and travel the 5-15 mins to the restaurant. By the time I arrive, the food had been finished just moments before, and I travel back home and enjoy my piping hot food. All told the process takes me half the time or less and the food is in perfect condition.


> the delivery driver doesn't deliver it well. I've waited over an hour for delivery food before.

That's the cost of delivery. You can pay to cover the cost of fast deliver with short wait times and get hot food, or you can pay a lesser amount on a gamble that it ends in a long wait and cold food, or you can pay with your time and do it yourself. The balance has never been in favor of the general availability of delivery (with the exception of maybe places like NYC). It's surprising that it's popular at all, really.


I'd be ok with it as long as the delivery platform makes it clear that you can order food but the restaurant isn't a participant in the platform, so the experience may not be optimized.

I was recently lamenting that I haven't had some favorite items from Trader Joe's in a while, because I've been using grocery delivery during the pandemic and TJ's refuses to partner with Instacart or provide their own delivery. I then came across Dumpling, a sort-of Instacart competitor where you connect with an individual who does the shopping/delivery for you, but they aren't limited to "officially supported" stores. I have no problem with this, and neither should Trader Joe's. It's simply an individual buying food from them and dropping it off somewhere.

Overriding the restaurant's contact info is sketchy. The food may not travel well, but some restaurants refuse to do takeout (either entirely or for certain dishes). But the basic act of paying a service to pick up something on your behalf isn't problematic to me. The restaurant shouldn't care if I pick up my order, or my wife picks up my order, or GrubHub picks up my order.


> why shouldn't those folks' ratings of the food be factored into the restaurant's rating?

Because a lot of people are not capable of differentiating between product and delivery, and poor delivery (which they have no control over in this case) shouldn't result in low ratings. Have you ever looked at Amazon reviews? A good chunk of them seems to purely give their stars based on delivery.


> If folks want to pay someone (Grubhub) to go pick up food for them, why should the restaurants be allowed to say no?

I agree, but GrubHub was marketing as if they were the restaurant. If it was clearly marked as "grub hub pickup for third-party restaurants" people would be more aware that GrubHub is responsible for choosing to deliver a restaurant that isn't interested in partnering to allow delivery.


I think the main problem is grubhub don't make it clear that this isn't "officially supported". Imagine someone set up a website claiming to sell your services, without making it obvious they have nothing to do with you, then after accepting jobs would ask you to do them (ok, this comparision doesn't quite work, but I think it gets the basic idea).


Image is very important for restaurants. If a customer has a bad experience, even if it's because of a third party driver they might not order there again. Many restaurants have their own driver, competing with grubhub hurts not just the driver, but the restaurant because they make extra money on deliveries.


I think one of the big issues is that if this is done honestly, telling the customer that this is what's happening (and the restaurant), that's ok. But both the customer and the restaurant were misled into this transaction.

But perhaps that would have led to a much lower CR on the site. Who knows.


IMO I agree that the real problem is the last one. GrubHub has a history of this, basically co-opting restaurants brands for their own benefit.

https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...

Also they then use SEO to get their own phone numbers and website higher than the actual restaurant's number/site, basically guaranteeing a cut of any phone/website order, even if the customer doesn't want to go through Grubhub.


Why should issues with a third-party delivery company affect the reputation of the restaurant itself? What you say on that point would apply if it were the restaurant’s in-house delivery service.


How are you certain that the food you are getting is from the establishment you ordered it from? Why can't I run a shadow kitchen pose as your restaurant and steal your business?


This is a strawman unless I missed where it's being specifically claimed. Obviously posing as the restaurant and serving your own product is fraud.


Does the fraud begin when you serve different food, or does it begin when you represent yourself as the restaurant without their consent? Everyone would agree passing off different food is fraud. Using a different number and marketing yourself as jdmichael's friendly delivery service is not fraud, since the customer knows they are not working directly with the restaurant. Using a different number and marketing yourself as the restaurant IMO is fraudulent.


I think everyone is in agreement regarding the information misdirection stuff being unethical at best and certainly potentially fraudulent. But simply listing restaurants and offering to deliver food from them is not that.


> This is a strawman unless I missed where it's being specifically claimed. Obviously posing as the restaurant and serving your own product is fraud.

Not exactly the same thing, but nearly as problematic:

https://www.nbcnewyork.com/news/local/seamless-restaurant-gr...

https://www.restaurantdive.com/news/why-ghost-restaurants-ar...

https://www.bloomberg.com/news/articles/2018-10-24/uber-s-se...

https://mix1065baltimore.radio.com/blogs/kramer-jess/warning...


> > Restaurants may not be able to handle the additional load placed on them by these services.

> I empathize with this one and don't really have a rebuttal.

Isn’t that classic supply and demand situation? Raise prices to drop demand until load drops to acceptable levels. More money for the restaurant as well as acceptable workload for the restaurant staff.


We finally started driving across town to get carry-out once we realized how big a difference in cost it was. Not only is there a fee but I think they're also inflating prices, and for some restaurants they kept getting the order wrong.

Plus the tip goes to their driver, not the restaurant. I mean yeah, props to the driver driving all over getting my food, but I want my guilt money to go to the cooks, who are breathing each other's air in a kitchen so I can stress eat, just feeling lucky they still have a job at all.


I'll admit I don't know the full story behind grubhub's practices with adding restaurants without the owners' permission.

It does sound like a case of "fake it till you make it", in a sense that adding restaurants without the owners' consent would be a way around the chicken and egg problem.

Not saying it's a particularly nice thing to do, I'd be super annoyed if it happened to me


I'll have to find the story, but there was a comment on hn when the last story about grubhub or other food delivery services. But there was a Italian place that didn't do delivery but they were getting bad reviews about cold pizza when delivered.

Then they found out company was delivering their food without their permission.


They then went on to arbitrage it.

https://www.theverge.com/2020/5/18/21262316/doordash-pizza-p...

> And so the story unfolds. “If someone could pay Doordash $16 a pizza, and Doordash would pay his restaurant $24 a pizza, then he should clearly just order pizzas himself via Doordash, all day long. You’d net a clean $8 profit per pizza [insert nerdy economics joke about there is such a thing as a free lunch],” wrote Roy. They order 10 pizzas this way, and it worked! The money was free, a seamless transfer from SoftBank’s deep venture capital-lined pockets to Roy’s friend’s business bank account. Eventually, in another series of what Roy hilariously calls “trades,” they just ordered pizza dough through DoorDash for $75 in pure profit.


If I remember right, GrubHub/Doordash will undercut restaurant prices to gain more customers for short-term, then later adjust prices back up once they establish a more stable audience.


This sounds like a case of "commit fraud until your victims are too dependent on you for survival til you make it" to me.


I'm curious why they would need the owner's permission for listing? I can understand the issues around things like the alleged practice of replacing the businesses' information. But the idea of just having a third-party delivery service acting as a middle-man... The restaurant is still getting paid whatever they charged. I don't understand why they would get a say anymore than, say, a book store regarding me reselling books I bought on eBay.


In this analogy, it would be more like you creating an eBay store called "Strand Books", listing the entire Strand Books' catalog, and then when someone purchases a book from you, popping into The Strand to get the book and shipping it to them.

Except sometimes they're out of the book, and so the customer never receives it. Or you damage the book between the book store and the post office, and they receive a badly damaged book.

The customer is going to be mad at the Strand, not at you. You'd be damaging their reputation.


But the customers are ordering the food from Grubhub, no? So why would they be confused that there's a middle-man?


A middle man is responsible to the consumer. A subcontractor is not. Grubhub does not tell the consumer whether they are acting as a subcontractor or middle man for a particular restaurant. This is deceptive and harms the restaurants who do not subcontract Grubhub.


I can buy this, if the customer is ordering directly from the restaurant and Grubhub delivers that order. Because that's what a subcontractor relationship looks like; you the customer only deal with the primary contractor. But if I order from Grubhub, I am explicitly asking them to be a middle man, no?


Grubhub often partners with restaurants. The fact they do not disclose the cases when they do not is very deceptive.


No. Just as Amazon and eBay maintain that your transaction is with the third-party seller, not them, Grubhub claim that your transaction is with the restaurant, and the restaurant is responsible for problems. Except when the restaurant didn't subcontract them, but they don't mention this. They can't have it both ways.


Grubhub literally says on their website "Grubhub helps you find and order food from wherever you are. How it works: you type in an address, we tell you the restaurants that deliver to that locale as well as showing you droves of pickup restaurants near you.".

Grubhub literally says 'shows you restaurants that deliver to you', imply the restaurant is delivering, not Grubhub. Furthermore it implies if you order, you're ordering from the restaurant- where Grubhub may have put up that ordering entirely without their consent!


At least you didn't cut off the second half of that sentence. The AS WELL AS there is carrying a lot of weight. As long as the restaurant is offering pickup service, Grubhub is very clear about that offering.


The restaurant may not be offering pickup service in a way they consent to because Grubhub is listing them against their consent. Grubhub isn't being clear that these restaurants haven't consented to orders via Grubhub.


This is just reiterating the first post I responded to, and so I'll respond in kind:

Why does Grubhub have any responsibility to obtain the restaurant's consent? If I pay someone to go to the grocers and pick up some items for me, is that someone obligated to obtain the grocers' permission? Why is this situation different?

If the restaurant is offering pickup service, then to me there is no obligation on any third party to obtain permission to utilize that service and deliver the results to a customer.


Grubhub doesn't state that they are picking it up for you. Grubhub states that the restaurant delivers.


The customers are ordering their food from the restaurant, via GrubHub.


People are stupid.


Because the service represents the restaurant as actually participating in the transaction. If the food gets delivered cold or the order gets messed up, the restaurant is likely to get bad Yelp reviews which can actually affect business.


Well, the restaurant is participating, in the sense that they are making food for a customer. They just don't understand who the customer actually is.

Secondly, are the customers not ordering the food from Grubhub? Why would they be confused about a middle-man being present?


> Why would they be confused about a middle-man being present?

In some cases its because GrubHub created a website for the restaurant and they don't make it clear that it's a GrubHub site and not a site operated by the restaurant. If you call the phone number on that site, a GrubHub employee answers as if they are the restaurant.


Because Grubhub makes it sound like they're a delivery service that the restaurants hired. On their front page right now, for example, they say "we tell you the restaurants that deliver to that locale" - that's not an accurate description if Grubhub is the one deciding whether to deliver.


You left out the second part of that sentence. Emphasis mine:

> ... you type in an address, we tell you the restaurants that deliver to that locale as well as showing you droves of pickup restaurants near you.

The complainants here seem to qualify under the second half of that sentence as long as they are offering a pickup service.


Grubhub uses "pickup restaurants" in its ordering UI to refer to restaurants where the final customer has to go pick up the food, so I don't think many consumers would understand this to refer to restaurants where Grubhub drivers do the pickup.


Because grubhub also marks up food on their website. Everything is a couple dollars marked up versus if you called the order in directly. Imagine opening an electronics store that sells marked up apple devices without any approval from apple, yet convincing customers that you were a genuine authorized seller. Apple would sue you out of existence before the end of the week, and rightfully so.

The only reason why it took this long for gruphub is that restaurants do not have the legal resources of a company like Apple or Grubhub, not because this isn't fraud (it is).


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