Chipotle Class Action Lawsuit: Service Fees Disguised as Taxes?

Case Overview: A class action lawsuit has been filed against Chipotle, alleging the company deceives customers by disguising service fees as sales tax on online orders.

Consumers Affected: U.S. residents who paid a "Service Fee" when ordering food for delivery through Chipotle's website or app.

Court: U.S. District Court for the Central District of California.

Chipotle restaurant sign

Customers Accuse Chipotle of Disguising Fees as Sales Tax

Chipotle is facing a spicy new class action lawsuit alleging it misleads online customers by disguising hefty service fees as sales tax.

Plaintiffs Hudson Gill and Clair Awad filed the class action complaint against Chipotle Mexican Grill Inc. on July 31 in a California federal court, claiming the restaurant chain is violating state and federal consumer laws.

The plaintiffs argue that when customers place a delivery order on Chipotle’s website or app, they encounter a checkout page displaying a delivery fee, tax, and total. 

However, buried within the “tax” is an undisclosed service fee, according to the lawsuit.

“Chipotle is hiding its hefty service fees inside of a ‘tax’ burrito,” the lawsuit states, calling it “textbook fraud.”

Chipotle accused of hiding service fees as sales tax

The complaint includes an example from Chipotle’s website, where a customer’s order shows a “tax” of $10.97. 

However, a closer look via a drop-down menu reveals that the actual tax is only $3.43, with the remaining amount being a concealed service fee. This service fee represents a substantial 20% of the subtotal, the lawsuit says.

The plaintiffs claim that consumers, believing the misleading tax charge is mandatory, end up paying it. Many customers may simply grumble and pay without ever clicking the drop-down menu to uncover the hidden service fee, the lawsuit adds.

“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,” the lawsuit argues.

Deceptive tactics prey on hungry customers, lawsuit claims

The lawsuit further alleges that Chipotle’s misleading advertising is especially deceptive because consumers placing orders 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 alleged bait-and-switch tactics.

The plaintiffs seek to represent all U.S. residents who paid 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, a class action lawsuit filed last month accuses Dunkin' Donuts of imposing hidden dine-in fees on customers without prior disclosure. The plaintiffs claim that the company's practice of revealing the charges only on receipts after purchase is deceptive and harmful to consumers.

Case Details

  • Lawsuit: Gill v. Chipotle Mexican Grill Inc.
  • Case Number: 8:24-cv-01672
  • Court: U.S. District Court for the Central District of California.

Plaintiffs' Attorneys

  • L.Timothy Fisher, Philip L. Fraietta and Stefan Bogdanovich (Bursor & Fisher P.A.)

Have you used Chipotle's website or app for delivery? Did you notice any hidden fees? Share your thoughts and experiences in the comments below.

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