NYC caps fees for third-party delivery platforms during state of emergency

Uber Eats
Photo credit Getty Images

NEW YORK (1010 WINS) -- The city council passed a bill on Wednesday to cap fees for third-party food delivery apps such as GrubHub, Uber Eats, and Seamless during a state of emergency.

The council overwhelmingly voted 46-4 in favor of a bill to cap the fee a restaurant can be charged as a way of providing financial assistance to restaurants struggling under strict coronavirus restrictions.

The legislation approved all five measures that were part of a package to help small businesses impacted by the coronavirus pandemic. 

“Small businesses and restaurants are the heart and soul of New York City and right now, they are hurting,” City Council Speaker Corey Johnson said in a statement. “They are paying high fees, getting harassed, and are worried about losing their homes. They need help and this small business package is designed to protect them during this pandemic.”

There have been complaints about fees charged by third delivery apps for restaurants that have seen a dramatic decrease in patronage and increase in deliveries during the crisis.

“Mom-and-pop restaurants across New York City are being bled dry by billion-dollar tech companies,” bill sponsor Council Member Francisco Moya said. “Exorbitant fees from third-party food delivery services threatened restaurants before the COVID-19 outbreak but like so many other issues, this crisis has amplified and expanded that inequity to devastating effects."

The New York City Council had started discussing ways to limit the fees charged by mobile apps before the pandemic hit.

The legislation limits third-party delivery fees to 15 percent per order during a state of emergency while a  limit of 5 percent was set per order for all other types of fees. 

“By capping the fees third-party food apps can charge restaurants during declared states of emergency, restaurants can continue providing essential services while not putting themselves out of business in the process,” Moya added.

Violators could be subject to civil penalties of up to $1,000 per restaurant per day.

The City Council also voted to prohibit delivery services from charging restaurants a fee for handling customer calls that do not result in an order being placed after restaurateurs told lawmakers last year that they are often charged when customers call a delivery service’s number to ask questions but do not necessarily place an order.

The bill allows the cap to remain in effect for the duration of and for 90 days after any qualifying state of emergency.