City Council passes bills extending small business protections

A food delivery worker rides a bicycle in midtown Manhattan following the outbreak of the COVID-19 in New York City on July 9, 2020. (REUTERS/Mike Segar/File Photo)

The City Council voted to pass landmark legislation extending third-party delivery app fee caps to protect small businesses.

The bill, known as Into No. 2359-A, was introduced by Councilman Francisco Moya and Small Business Committee Chair Mark Gjonaj to extend the laws that already prohibit third-party delivery platforms from charging restaurants more than 15 percent per order for delivery and more than 5 percent per order for all other fees, pushing the end date of these caps until Feb. 17, 2022.

The bill will also clarify the types of transaction fees exempted from these limits on charges. The cap was due to expire next month, allowing apps to charge commissions as high as 30-35 percent combined.

“For too long, there’s been an imbalance of power between these third-party food delivery services and restaurants,” Moya said. “Small businesses should not be pressured into accepting these fees in order to remain viable and competitive. We have the opportunity and a responsibility to protect our mom-and-pop shops and ensure they survive. To allow the temporary cap to expire would completely handicap the recovery of so many businesses that are just starting to get back on their feet.”

Another small business bill passed by the City Council will require the third-party delivery platforms to share information related to delivery orders placed through their website or mobile application with restaurants that request it.

The information would consist of the customer’s name, phone number, e-mail address, delivery address and the contents of their orders.

Customers would be able to opt out of the sharing of this information, and the service would be required to provide a clear disclosure to customers explaining what information would be shared with the restaurant.

“The relationship restaurants share with their customers is key to their success, and as we emerge from the pandemic, it is critical for their survival,” NYC Hospitality Alliance Executive Director Andrew Rigie said. “Unfortunately, for too long, third-party delivery companies have withheld restaurants’ own customer data from them, to ensure they couldn’t directly manage their customer relationships in order to extract high fees from small businesses and to keep them hostage on their delivery platforms.”

The legislation will create a more fair and equitable marketplace that empowers both restaurants and their customers.

The bills now go to the mayor’s office.

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