•  Summary 
  •  Actions 
  •  Committee Votes 
  •  Floor Votes 
  •  Memo 
  •  Text 
  •  LFIN 
  •  Chamber Video/Transcript 

A04127 Summary:

COSPNSRMcDonald, Burdick
Add §391-v, Gen Bus L
Prohibits third-party food delivery services from charging a food service establishment a delivery fee that totals more than a certain percent of the total purchase price of an online order.
Go to top

A04127 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  TITLE OF BILL: An act to amend the general business law, in relation to third-party food delivery service charges; and providing for the repeal of such provisions upon expiration thereof   PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to cap the permissible fees third-party food delivery services may charge to restaurants for delivery services for the period of the COVID-19 related public health emergency and 90days after.   SUMMARY OF PROVISIONS: Section 1 (1) adds new section 391-v of the general business law, which sets definitions of terms.(2) Establishes that no third-party food delivery service shall charge a food service establishment a delivery fee that totals more than fifteen percent of the purchase price of each online order, and that no third-party delivery service shall charge any fee other than a delivery fee or a payment processing fee for the use of their service that totals more than five percent. Clarifies that nothing in the bill prohibits any agreement between a food service establishment and a third-party food delivery service to obtain optional products or services, including, but not limited to, advertising, marketing, or access to customer subscription programs (3) Sets terms and penalties for violations of this section and enforcement thereof and preempts any local and municipal rules, regulations, codes, statutes, or ordinances regarding third party delivery fees. (4) clarifies that this legislation shall preempt any local laws on the topic. Section 2 is the effective date.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE): This amendment removes the term credit card fee and replaces it with payment processing fee. In addition, it allows for a food service estab- lishment to exceed the fee cap for optional services such as advertis- ing, marketing, or customer subscription programs. This amendment also includes preemption language for local laws and rules regarding third party delivery fees.   JUSTIFICATION: Third-party food delivery services typically take between 10 and 30 percent commission per order from the restaurants. In some cases, this number goes up to 40% depending on the "marketing services" provided (e.g., prioritizing a certain restaurant on the platform, search engine optimization or providing a phone line). These commissions have risen to exploitative levels and are putting immense pressure on the hospital- ity businesses already struggling to survive. Increased reliance on online marketplaces for products and services has reshaped the hospital- ity market and the leverage of technology platforms on food retail establishments have grown considerably as a result. These online deliv- ery- platforms, many of which have been and still are loss-making ventures, have expanded their reach and influence while sustaining financially by relying on growth equity. To attain profitability these platforms are now using their leverage over small businesses to increase their margins by extracting exorbitant commissions, simply for providing access to customers. Restrictions placed on dining services in the aftermath of COVID-19 have further disadvantaged the restaurants already at risk of exploitation making the issue, and a legislative action, even more urgent.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: This act shall take effect immediately, and shall expire and be deemed repealed ninety days after the end of the state disaster emergency declared pursuant to executive order 202 of 2020, and as extended by any future executive order.
Go to top