from the not-so-innovative dept
U.S. regulatory enforcement and punishment for companies that rip consumers off with sneaky fees is not what you’d call… consistent. For example, the telecom and cable industries have long exploited a wide array of bullshit fees to jack up advertised prices with only fleeting penalties. The same can be said for the banking, airline, hotel, and numerous other industries that happily nickel-and-dime users.
At some point, it became the regulatory policy norm in the United States to tacitly approve ripping your customers off, provided you’re just marginally clever about it. Punishment for falsely advertising lower prices or ripping consumers off can often be hard to come by.
Last week, District of Columbia Attorney General Karl Racine noted he’d be suing Grubhub for both misleading fees and a variety of other dodgy business practices:
“Grubhub misled District residents and took advantage of local restaurants to boost its own profits, even as District consumers and small businesses struggled during the COVID-19 pandemic,” said AG Racine. “Grubhub charged hidden fees and used bait-and-switch advertising tactics—which are illegal.
What also got Grubhub into trouble was a marketing promotion they launched that provided users “discounts” the company said would go toward helping struggling restaurants during the COVID crisis. Instead, Grubhub simply passed on the revenue loss to local DC restaurants:
“But Grubhub didn’t fully cover the costs of these discounts. Instead, it passed most of the costs of the discounts along to the already-struggling restaurants. Grubhub also forced the restaurants to pay its full commission—based on non-discounted prices—on the discounted orders. This promotion severely cut into restaurants’ already-small profit margins, and misled DC residents who believed their orders through Grubhub would help their favorite restaurants.”
Of course broadband providers ripped users off during the pandemic in a variety different ways including completely arbitrary and unnecessary fees, and not a single one faced any penalty whatsoever. So while this may be a welcome development and fitting punishment for Grubhub, government crackdowns on the exploitation of consumers by sneaky fees remains inconsistent.