Business

New probe stirs in Grubhub fee fight

Grubhub may soon be getting an unwelcome order — from the federal government.

The Small Business Administration — a US agency that guarantees loans to mom-and-pop businesses — is probing how the online delivery giant has charged restaurants thousands of dollars in bogus fees for phone orders that never happened, The Post has learned.

The SBA, which initiated its probe after The Post exclusively reported on the fake phone fees, also may support legislation to cap how much Grubhub can charge per order, an official said. It doesn’t have regulatory authority as such but can recommend action to other agencies.

“The more we’re peeling back the onion layer … it’s like, wow, this is a real problem and something’s got to be done,” Steve Bulger, the regional administrator for the SBA, told The Post.





Bulger’s comments come a day ahead of the New York City Council’s scheduled hearing on the steep and questionable fees that Grubhub and other dominant delivery services are charging restaurants. Frequently, the fees can soar as high as 30 percent of an order — a crippling cut for eateries that already run on thin margins.

The SBA is concerned that the charges could end up weakening restaurants’ ability to pay back loans guaranteed by the agency to help startups, expanding businesses, and even companies affected by natural disasters, like Hurricane Sandy in 2012, Bulger said.

“Anything that is going to negatively impact a particular segment where there’s a lot of SBA involvement, we want to make sure we advocate and don’t let things get too far,” he said.





The SBA has guaranteed more than 900 loans totaling about $353 million to New York-area restaurants since 2011, according to SBA data.

“This is something that we will push through our congressional liaison,” Bulger added. “If this is a national issue and it’s hurting small businesses and consumers alike, then that’s something Congress is going to want to hear about.”

Bulger added the matter could be referred to the Justice Department and Commerce Department as well.

He said he would support a “limit or formula that the [New York] Restaurant Association and everybody would feel reasonable about. Everybody’s going to have to compromise, right?”

Meanwhile, Grubhub appears to have quietly stopped charging restaurants for bogus telephone orders.

A Grubhub rep declined to comment on whether it has eliminated the fee altogether, citing “pending litigation.”





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