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Square Paying $2.2 Million to Settle Caviar Lawsuit

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Jun. 18 2018, Updated 9:01 a.m. ET

Caviar produced $97 million in revenue

Square (SQ) has agreed to release $2.2 million to certain customers of its online food delivery service, Caviar, to settle allegations of a fake tipping program. Caviar is Square’s equivalent of Uber’s UberEats and GrubHub’s (GRUB) Eat24 service, which was acquired from Yelp (YELP) last year.

Caviar sales are reported under Square’s subscription and service segment, where revenue grew 98% YoY (year-over-year) to $97 million in the first quarter. The settlement amount comprises ~2.3% of Square’s first-quarter subscription and service revenue.

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Square settled to avoid distraction

A 2016 lawsuit accused Square of collecting tips from Caviar customers but failing to pass on the money to Caviar delivery drivers. Square denied wrongdoing but chose to settle the matter to avoid the cost and distraction of litigation, a Square spokesperson told TechCrunch.

More than 93,000 customers joined the Caviar class-action lawsuit, and each is expected to receive slightly more than $15 as part of the settlement. The lead plaintiff in the lawsuit is expected to receive about $10,000, while lawyers involved in the case are poised to receive as much as $755,000. A court is expected to rule on September 21 on whether to approve or deny the settlement.

Square’s revenue grew 45%

Square’s revenue rose 45% YoY to $669 million in the first quarter. Meanwhile, revenue grew 24% YoY at PayPal (PYPL) and 43% YoY at Amazon (AMZN).

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