Last year, the city of Chicago sued both DoorDash and Gruhub, accusing the third-party delivery couriers in separate filings of illegal business operations. Allegations include accusing Grubhub of ignoring the city’s pandemic emergency fee cap and both platforms for listing restaurants on ordering platforms without their consent.
Somehow, Uber Eats escaped the city’s legal fury, but now the city of Chicago has revealed that it has been working with the company on an out-of-court settlement. On Monday morning, the city announced a $10 million settlement with Uber Eats, which also owns Postmates. The settlement includes $500,000 set aside for restaurants listed on the platforms without their consent. The city has established a website to determine eligibility. The deadline to file is January 29 and payments will be made by March 1.
This concludes a two-year investigation of Uber, according to a release.
“We are committed to supporting Uber Eats restaurant partners in Chicago and are pleased to put this matter behind us,” an Uber Eats spokesperson writes in a statement.
In the settlement, the city contends that Uber “listed unaffiliated Merchants on its Platforms without consent” and “deceptively advertised that Eats Pass and Postmates Unlimited subscribers would receive ‘free delivery’ or ‘$0 Delivery Fees.’”
The city also alleges that Uber claimed certain restaurants were exclusive to their ordering platform and linked Uber “order” buttons to Google Search and Google Maps listings “without adequate disclosure to consumers and without consent from the Merchants.”
That topic continues to be an issue for Chicago restaurants. Last week, Smoque BBQ and Brown Sugar Bakery went public as they were victims of a new scam in which their DoorDash listings were taken down and replaced by fraudulent listings. Customers using those listings never got their food as the orders never went to the restaurants they were attempting to order from. Instead, another party was paid for the orders. DoorDash never checked in with the restaurant before they made changes to the listing. The law firm of Cohen Milstein Sellers & Toll and Chicago’s law department are pursuing cases against DoorDash and Grubhub. The same legal pair partnered to work on the Uber settlement.
Phillip Foss, the fine dining chef behind El Ideas, has been a critic of third-party delivery. He sees the settlement as a positive: “As much as I hate to see regulation, unfortunately, when nefarious intentions are at play, people are going to take advantage… They need to be held accountable when it takes place.”
“It’s not just a segment of sales for restaurants at this point — it’s predominant in many cases, especially less-expensive eateries,” Foss adds.
Brad Rubin, the owner of 16-year-old Jewish deli and restaurant Eleven City Diner, once used Postmates but says the company kept a fraudulent listing for months, so he kept fighting. Uber Eats, which acquired Postmates in late 2020, pulled down the page after about a year: “We severed the relationship with both companies,” Rubin says. “But after that, we were able to come back [to Uber Eats] and reestablish a relationship through a new representative, someone who cared and understood what we were going through… There’s been a very different tenor at Uber Eats over the past four months, and I don’t know why. It seems like a very different company and that’s been a surprise to us.”
The settlement also made clear that Uber and the city “wish to settle, compromise, and resolve any and all claims, demands, disputes, fines, penalties, violations, citations, and all causes of actions and claims.” That distinguishes Uber from rivals DoorDash and Grubhub, which have publically denied wrongdoing and have vowed to fight the lawsuits. Last week, a DoorDash spokesperson told Eater Chicago that the parties are a long way from any resolutions. This is the same scenario as in San Francisco where Uber also was quick to settle earlier this year.
Likewise, the city’s news release stresses that “Uber quickly repaid $3,331,892 to Chicago restaurants that had been charged commissions exceeding 15 percent, in violation of the City’s emergency fee cap ordinance.“
The city’s emergency cap, which limited fees to 15 percent, took effect in November 2020 and expired in April 2021.
In addition to that amount, Uber will pay another $2,250,000 “in restitutions” to Chicago restaurants that were charged commissions that exceeded the 15 percent emergency cap. The city also says Uber removed all restaurants listed without consent and agreed not to list them in the future. Uber will also pay restaurants listed without their consent $500,000 and $2.5 million in commission waivers, as part of the settlement. The company will also cover the city’s $1.5 million in investigation fees.
The Illinois Restaurant Association worked with the city on the settlement. They helped set up a memorable gathering with the city council in May 2020, when restaurant owners blasted third-party companies.
In August 2021, a city attorney told Eater Chicago that even though the city wasn’t suing Uber, it wasn’t off the hook. Now, 16 months later, the public gets a glimpse of the behind-the-scenes efforts.