New York City Council approves permanent caps on food delivery charges – Compliance

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United States: New York City Council approves permanent cap on food delivery charges

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Late last month (August 26), the New York City Council voted to approve a bill that serves to permanently cap the commissions that third-party food delivery service providers can charge restaurants. The same bill also seeks to regulate food delivery services by requiring licenses across the industry. The legislation is now awaiting the signature of Mayor Bill de Blasio.

Permanent cap on commissions

If and when enacted, the bill would permanently extend service charge caps as authorized by New York City Council on a temporary basis in May 2020, to protect small businesses. Pending legislation seeks to prohibit delivery service providers from charging restaurants more than 15% per order for delivery and more than 5% per order for all other charges (except transaction fees) on a continuous basis. The bill would further prohibit delivery service providers from charging more than 3% per order for transaction fees, unless those providers prove that the higher fees reflect pass-through charges imposed by a credit card company. or an online payment system.

License requirements

In terms of licensing, the bill, if enacted, will require delivery service providers to apply every two years for a license from the Department of Consumer and Worker Protection (DCWP) to do business at New York. Services subject to the license requirement are broadly defined to include any website, mobile application or internet service that provides third party food delivery services from any catering establishment.

Penalty for non-compliance

Mayor de Blasio’s Office Bill introduces civil penalties for delivery service providers who charge fees above the cap and allows civil actions by the New York City Council or anyone against whom a violation has been made. committed.

Assuming Mayor de Blasio signs the bill, which is expected, New York will join San Francisco as the second city to make temporary caps on delivery charges permanent during a pandemic. For their part, restaurants have generally supported these caps, while delivery service providers argue that the law would be unconstitutional and only serve to increase delivery costs, which will ultimately negatively impact restaurants.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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