DoorDash Reaches $18 Million Settlement with Chicago Over Pandemic-Era Practices
Chicago residents and local businesses are set to receive compensation following a landmark $18 million settlement with DoorDash, resolving a four-year legal battle centered on alleged deceptive practices during the height of the COVID-19 pandemic. The agreement, announced Friday, addresses concerns over inflated menu prices, unauthorized restaurant listings, and questionable fee structures imposed on consumers.
The lawsuit, initially filed in Cook County Circuit Court in August 2021, alleged that DoorDash exploited increased demand for food delivery services to boost profits at the expense of Chicago customers, restaurants, and delivery drivers. Specifically, the city contended that DoorDash marked up menu items beyond what restaurants charged, added restaurants to its platform without their explicit permission, and implemented a $1.50 “Chicago Fee” in response to a temporary cap on commission rates imposed by the city.
Breakdown of the Settlement Funds
The $18 million settlement will be distributed as follows:
- $3.25 million will be paid to restaurants that were listed on the DoorDash platform without their consent and are no longer partnered with the service.
- $5.8 million will be issued as delivery and marketing credits to restaurants that were initially listed without consent but have since joined the platform.
- $4 million will be provided as credits for food delivery orders to eligible Chicago customers, beginning January 28.
- $500,000 will be allocated to compensate drivers who delivered food orders in Chicago as of September 2019, addressing concerns over the company’s previous practice of using customer tips to offset driver pay.
Mayor Brandon Johnson hailed the settlement as a victory for Chicago’s workers and small businesses. “This settlement demonstrates Chicago’s commitment to standing up for workers and small businesses while maintaining a fair and honest marketplace,” he stated in a press release. “Our hospitality industry is critical to our economy, and it works best when companies play by the rules, workers are treated fairly, and consumers see transparent pricing.”
The Broader Context: DoorDash and Grubhub Under Scrutiny
This settlement isn’t an isolated incident. In 2021, the Lightfoot administration also filed a similar lawsuit against DoorDash’s competitor, Grubhub, alleging comparable deceptive practices. That case remains ongoing in Cook County Circuit Court. Furthermore, Grubhub recently faced a $25 million settlement with the Federal Trade Commission and Illinois Attorney General Kwame Raoul’s office over deceptive claims, highlighting a pattern of scrutiny within the food delivery industry. Grubhub’s $25 million settlement underscores the increasing regulatory pressure on these platforms.
DoorDash, while not admitting any wrongdoing, has stated it has ceased the practices that were the subject of the lawsuit. This includes eliminating the Chicago Fee, ensuring that 100% of tips go to drivers, and removing non-partner restaurants from its platform. “We’re pleased to have settled a years-old lawsuit with the City of Chicago,” a DoorDash spokesperson said. “To be clear, this settlement isn’t an admission of wrongdoing and the allegations in this lawsuit focus on business practices that no longer exist. We’re glad to put this behind us.”
The situation raises a critical question: how can cities effectively regulate the rapidly evolving gig economy to protect consumers and ensure fair competition? And what responsibility do these platforms have to maintain transparency in their pricing and business practices?
Grubhub, which was sold to Wonder Group in November 2024 for $650 million, has not yet commented on the DoorDash settlement. A spokesperson for Grubhub did not immediately respond to a request for comment.
For more information on the evolving landscape of food delivery regulations, consider exploring resources from the Federal Trade Commission and the Illinois Attorney General’s Office.
Frequently Asked Questions About the DoorDash Settlement
A: Eligible Chicago consumers will receive credits for future food delivery orders through DoorDash, starting January 28.
A: Restaurants that were listed on DoorDash without their consent will receive financial compensation, either through direct payments or delivery/marketing credits.
A: The “Chicago Fee” was a $1.50 charge added to every DoorDash order within city limits, implemented after the city imposed a cap on commission rates charged to restaurants.
A: No, the lawsuit against Grubhub is still ongoing in Cook County Circuit Court.
A: DoorDash has eliminated the Chicago Fee, ensures all tips go directly to drivers, and no longer lists restaurants on its platform without their consent.
A: This settlement sends a clear message to food delivery platforms that deceptive practices will not be tolerated and highlights the importance of transparency and fair treatment of both businesses and consumers.
Share this article with your network to spread awareness about consumer rights and the evolving landscape of the food delivery industry. What further steps should cities take to regulate these platforms and protect local businesses?
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