California Bill Requires Disclosure of Hidden Fees From Food Delivery Apps

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The state senator behind the bill says online platforms are leveraging their growing clout to impose fees.

Online delivery platforms such as GrubHub, DoorDash and UberEats would be required to disclose hidden fees to restaurants and customers under a bill introduced in the California Legislature this year.

Senate Bill 1490, introduced by Los Angeles-based Sen. María Durazo, would require the platforms to disclose the amounts of the fees. Under current law they need to disclose only that there is a fee, but not the amount.

The bill would also “ban delivery platforms from limiting the value or number of transactions disputed by a restaurant,” said a statement from the Digital Restaurant Association.

According to the statement, the bill would require platforms to offer a mechanism for removing a restaurant from the platform, and mandate that platforms not penalize restaurants that refuse a service offered by the platform.

Ms. Durazo didn’t respond to a request for comment by press time.

In an interview with the Sacramento Bee, she said, “Customers and restaurants are paying high and often hidden fees when ordering through big third-party delivery platforms,” adding that the bill would provide transparency so that customers “can make informed decisions when ordering food from their favorite restaurants.”

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A statement from her office sent to the online news outlet cited an increase in online orders from the delivery platforms since the COVID-19 pandemic, with online orders now making up 30 percent to 40 percent of restaurant revenue.

The large platforms are using that leverage to impose high and hidden fees, the statement said.

The bill is sponsored by the Digital Restaurant Association, a coalition that advocates for digital sustainability in the restaurant industry.

“Restaurants and customers alike deserve transparency to know exactly what fees are charged and who is receiving them. …  This critical California legislation is taking a step toward protecting consumers and restaurants from unfair and harmful business practices of the big tech food delivery apps,” the coalition wrote in its March 25 statement.

The bill will be heard by the Senate Judiciary Committee on April 16.

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