States & Cities Clamp Down on Food Delivery Fees

Cities such as Seattle, Washington, D.C., and New York City are aiming to curb abusive food delivery fees by placing fee caps on companies such as DoorDash.

Several cities took action early into the coronavirus pandemic to protect both consumers and local restaurants from excessive delivery fees when conducting business through third-party food delivery apps. These apps have increased in popularity during the coronavirus pandemic as they allow consumers to order food from local businesses without leaving the safety of their homes.

Although third-party apps such as DoorDash, GrubHub, and UberEats offer valuable services, excessive fees can cut into restaurant profits and cause consumers financial injury. But numerous cities around the country have taken action to curb these fees.

Seattle became one of the first cities to pass a fee cap during the pandemic.

In late April, the city limited commission caps from third party apps to 15 percent. This limit, which aims to reduce the financial burden on both businesses and customers, was predated by reports that third-party food delivery apps charged some local businesses commission fees of up to 30 percent.

“Unfortunately, some third-party delivery services are charging exorbitant commission fees, which exacerbates the financial hardship many restaurants are already experiencing,” Seattle Mayor Jenny Durkan said in a news release. “This commission cap will be critical to ensuring that delivery and takeout remain viable options and don’t cause increased financial hardship.”

In early March 2020, Washington, D.C., followed in Seattle’s example by passing a 15 percent limit on delivery fees from third-party food delivery apps. The measure was passed as a part of a larger relief bill that included benefits such as rent payment plans and delayed foreclosures.

New York City passed its own delivery fee cap in late March 2020. The local law limited third-party apps to charging fees that are up to 20 percent of the order’s total. This limit includes delivery fees of up to 15 percent of an order’s total and other fees of up to 5 percent.

These limits are set to be in effect during any declared emergency that limits in-person dining — including the ongoing coronavirus pandemic — and for 90 days after such an emergency. If businesses such as DoorDash and GrubHub fail to comply, they could be hit with legal action and civil penalties of up to $1,000 per violation.

In addition to city regulations, states such as New York and Massachusetts have passed measures to limit fees.

And more recently, federal lawmakers have started to call for change when it comes to third-party app delivery fees.

City and state measures can help protect consumers from potentially abusive fees, but customers of third-party food delivery apps may still face excessive fees. In these situations, consumers may be eligible to take legal action.