Class Action Claims Chipotle Hides Fees Despite Advertising ‘Free’ and ‘$1’ Delivery [UPDATE]
by Erin Shaak
Last Updated on March 7, 2022
Dundon v. Chipotle Mexican Grill, Inc.
Filed: March 1, 2021 ◆§ 3:21cv236
Chipotle deceived consumers by claiming to offer “free” or “$1” delivery while adding hidden fees to and marking up prices for delivery orders, a class action claims.
March 7, 2022 – Cash or Voucher: File a Claim for the Chipotle Delivery Fees Class Action Settlement
The official settlement website for the proposed class action detailed on this page and a related suit in California state court is live and can be found here:
The $4 million deal, which received preliminary approval from Alameda County Superior Court Judge Evelio Grillo on January 19, 2022, covers all consumers who made a food delivery order through Chipotle’s app or website and were charged a service fee and/or increased menu prices between May 11, 2020 and January 19, 2022.
To file a claim, head to this page and enter your 10-character unique settlement ID number to begin. If you did not receive a unique settlement ID number but feel you are covered by the deal, contact the settlement administrator.
Claims must be submitted by June 28, 2022. If you do nothing, you will receive no benefits from the settlement.
Through the settlement, consumers who are/were not Chipotle Rewards members can submit a claim to receive a digital cash payment. Those who are/were Chipotle Rewards members are eligible to submit a claim for a voucher for one free entrée from the restaurant. “Class members” can expect payments/vouchers to begin to be distributed if and when the court grants final approval to the settlement.
Chipotle denies the allegations in the litigation and asserts that all communications regarding its delivery orders were truthful. The company settled the lawsuits to avoid further litigation and the “distraction of resources” from its business, the website states. A copy of the notice sent to consumers covered by the settlement can be found here.
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Chipotle Mexican Grill, Inc. has deceived consumers by claiming to offer “free delivery” or “$1 delivery” amid the pandemic while at the same time adding hidden fees to and marking up prices for delivery orders, a proposed class action claims.
The 18-page lawsuit alleges Chipotle has, since the beginning of the COVID-19 pandemic, “exploit[ed] an opportunity presented by Americans’ reduced willingness to leave their homes” by prominently marketing “free” or “$1” delivery for food and drink products, representations that the plaintiff claims are “deceptive and untruthful.” Despite offering reduced-cost or free delivery, Chipotle has, unbeknownst to consumers, both added an additional 10-percent “service charge” exclusively to delivery orders and marked up food prices for deliveries by 12 to 15 percent, the lawsuit clams.
“Both of these hidden delivery upcharges make Chipotle’s ‘free’ or ‘$1’ delivery promises patently false,” the complaint says. “The true delivery costs are obscured, as described above, and far exceed the prominent ‘free’ or ‘$1’ promises.”
According to the lawsuit, Chipotle “omits and conceals material facts” about its delivery service by advertising such as “free” and “$1” on its mobile application and website while “never once informing consumers” of the service charge or marked up prices for delivered food.
“Hundreds of thousands of Chipotle customers like Plaintiff have been assessed hidden delivery charges they did not bargain for,” the suit alleges.
Per the case, the “service charge” applied exclusively to delivery orders is hidden from users under a “Taxes and Fees” section on Chipotle’s ordering screen. The hidden service charge is revealed only when a customer clicks on “Taxes and Fees,” upon which two more lines, marked “Tax” and “Service Fee,” appear, the lawsuit says. The “service fee,” according to the suit, amounts to 10 percent of the total cost of the food and constitutes a hidden delivery charge given it applies exclusively to delivery orders.
The lawsuit argues that while Chipotle explains in a disclaimer that the service charge “helps offset the costs of digital convenience,” this representation is false in that the fee is not applied to orders placed for pickup through the defendant’s mobile app or website despite the fact that consumers are offered the same level of “digital convenience.” Only after a delivery order is placed does Chipotle email the customer a receipt that accurately represents that the hidden service charge “powers easy, integrated delivery,” the case says.
The suit goes on to allege that Chipotle marks up its prices for delivered food by as much as 12 to 15 percent while declining to apply the same markup to items ordered for pickup. In truth, the markup is a hidden, undisclosed delivery fee, the lawsuit avers.
The lawsuit looks to represent consumers nationwide who, within the applicable statute of limitations preceding the filing of the case through the date of class certification, ordered food for delivery through the Chipotle app or website and were charged higher delivery costs than represented.
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