Chipotle class action claims restaurant misrepresents service fees as tax

Chipotle fees class action overview: 

• Who: Chipotle customers Hudson Gill and Clair Awad are suing the fast food chain.
• Why: Gill and Awad allege the fast-casual restaurant charges exorbitant service fees to its online customers while disguising them as taxes.
• Where: The Chipotle fees class action lawsuit was filed in a California federal court.

Chipotle lies to its online customers when they place delivery orders, disguising “eye-popping” service fees as sales tax, a new class action lawsuit alleges.

Plaintiffs Hudson Gill and Clair Awad filed the class action complaint against Chipotle Mexican Grill Inc. on July 31 in a California federal court, alleging violations of state and federal consumer laws. 

The plaintiffs claim that whenever consumers go to Chipotle’s website or app and place a delivery order, they are taken to a checkout page that discloses a delivery fee, tax, and total. However, included in the “tax” is an undisclosed service fee, the lawsuit states.

“In other words, Chipotle is hiding its hefty service fees inside of a ‘tax’ burrito,” the lawsuit says. “This is textbook fraud.”

Customers tricked into paying faux taxes, Chipotle class action claims

The lawsuit shows an example from the Chipotle website, where a customer’s order states the “tax” on a particular order is “$10.97.” However, on closer inspection through a drop-down menu, the plaintiffs say Chipotle admits the ‘Tax” itself  is only $3.43. 

This means the “service” fee represents a “whopping” 20% of the subtotal, the lawsuit says. 

The plaintiffs claim that law-abiding consumers pay the misleading tax charge because they believe they have to. 

“As such, many consumers will simply grumble and pay, without ever even clicking the drop-down button for the taxes that hides details about the service fee,” the lawsuit says. 

“By hiding its service fees under the cloak of taxes, Chipotle can unjustly enrich itself by falsely making people believe they are paying taxes for the public good. They are not.”

Chipotle takes advantage of consumers, lawsuit alleges

Chipotle’s allegedly false and intentionally misleading advertising is “particularly deceptive” as the consumers at purchase are likely “hungry, their blood sugar is low, and their concentration levels are waning.” 

As a result, they are less likely to notice Chipotle’s bait-and switch tactics, the lawsuit alleges. 

As a result, the plaintiffs seek to represent all United States residents who paid Chipotle a “Service Fee” while ordering food for delivery through Chipotle’s website or app. They are suing for violations of California’s Unfair Competition Law, California’s False Advertising Law, New York’s General Business Law, Fraud and Unjust Enrichment. 

Meanwhile, another class action filed against Chipotle in February claims the company’s policy of denying refunds for orders paid for with gift cards is a violation of several deceptive trade laws.

What do you think of the claims in this Chipotle fees class action lawsuit? Let us know in the comments. 

The plaintiff is represented by L. Timothy Fisher, Stefan Bogdanovich and  Philip L. Fraietta of Bursor & Fisher P.A. 

The Chipotle fees class action lawsuit is Hudson Gill et al., v. Chipotle Mexican Grill Inc., Case No. 8:24-cv-01672 in the U.S. District Court for the Central District of California.

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