Grubhub is using thousands of fake websites to upcharge commission fees from real businesses
Grubhub has been buying tens of thousands of domain names that resemble those of businesses they either work with or are pitching to get on the platform, reports New Food Economy. Those domains, of which Grubhub owns as many as 23,000, are used to resemble a landing page for the official business, complete with an online ordering form, despite the sites being completely unassociated with the restaurants themselves.
Restaurant owners are calling the practice predatorial, noting that Grubhub is leading customers to believe they’re ordering directly from restaurants to help businesses avoid paying fees to Grubhub. The online ordering giant, the largest in the country, is the parent company of multiple food delivery services, including Eat24, MenuPages, and Seamless. However, its spot as the top of the delivery market is being threatened by competing services like DoorDash and Uber Eats.
The Grubhub-owned domains use a template that is consistent across all the shadow sites. They feature items from the restaurant’s actual menu, and sometimes the sites use photos taken from either the restaurant’s official webpage or from competing delivery services. I’m intimately familiar with the tactic because and here’s the big disclosure my parents own a restaurant in Queens, New York and they are currently listed on both Seamless / Grubhub and Caviar. They also have an official restaurant site.
However, an alternative website with a similar-sounding URL (.com versus .net) set up by Grubhub without their expressed permission uses the restaurant’s original logo and food photos taken by a photographer from Caviar. The site also includes multiple “Order Now” links that lead to the Seamless listing and a phone number unassociated with the restaurant’s official business number.
Ordering food online or from an AI might be “easy,” but the real costs are taken from the businesses themselves. Here’s a fake website GrubHub set up to resemble my parents’ biz in an effort to drive up commission (from 3% to ‼20%‼) https://t.co/jVetvS8SU9 pic.twitter.com/CmL05aVrF2
— Natt การุณรังษีวงศ์ (@nattgarun) June 28, 2019
Grubhub charges anywhere from a 3 to 15 percent commission fee depending on whether a restaurant provides their own delivery fleet. However, if a customer orders from a restaurant using Grubhub’s “marketing” tactics, whether through an app search or these unassociated websites, Grubhub can bill for an additional 20 percent commission on a single order. These fees also extend to phone orders, which Grubhub was sued over after a lawsuit alleged the company was charging commission for bogus phone calls that did not directly result in an order.
Grubhub denies wrongdoing, noting that this practice is intended to help boost restaurant orders. “Grubhub has never cybersquatted, which is identified by ICANN as ‘generally bad faith registration of another person’s trademark in a domain name,’” the company said in a statement. “As a service to our restaurants, we have created microsites for them as another source of orders and to increase their online brand presence. Additionally, we have registered domains on their behalf, consistent with our restaurant contracts. We no longer provide that service and it has always been our practice to transfer the domain to the restaurant as soon as they request it.”