facebook pixal
Technology

Delivery providers accused of violating NYC fee cap

A Manhattan bakery alleges in a lawsuit that DoorDash, Uber Eats and Grubhub restructured their fees to skirt the city's 20% cap.
Delivery apps on phone screen
Photograph: Shutterstock

A New York City restaurant is accusing DoorDash, Grubhub and Uber Eats of violating the city's limit on delivery fees.

In a lawsuit filed Monday, the owners of Michaeli Bakery in Manhattan said the third-party providers restructured their fees to get around New York's 20% fee cap, which limits delivery fees to 15% and any additional fees to 5%. The temporary cap was put in place last June to help restaurants during the pandemic and will last until after restaurants are allowed to return to full capacity.

The complaint alleges that Uber Eats and DoorDash violated the law by charging an ambiguous 20% fee, and that Grubhub charged multiple fees for non-delivery services that exceeded the 5% limit when added together. It also accuses the companies of fraudulently inflating their credit-card processing fees to as high as 4.5%. The law was amended in September to exclude credit-card fees from the 20% cap.

The action seeks classification as a class action.

A Grubhub spokesperson said the lawsuit is meritless. "We look forward to responding to these baseless allegations," the spokesperson said in an email. 

"The claims in this lawsuit are entirely wrong," a DoorDash spokeswoman said in an email. "DoorDash has complied with the price control in New York City, while investing in products, policies, and partnerships that provide restaurants with choice and transparency, including $10 million in direct grant funding, enabling them to meet customers where they are, grow sales, and adapt to changes. In fact, the odds of staying in business during the pandemic are eight times better for restaurants on DoorDash.”

Uber Eats had not responded to a request for comment as of publication time.

The suit comes amid attempts in New York City to crack down further on third-party delivery companies. A City Council bill introduced last month would require the companies to share more data with restaurants, and Councilman Mark Gjonaj has said he intends to pursue legislation that would make the delivery fee cap permanent. 

It was filed in U.S. District Court in the Southern District of New York and seeks to represent any New York City restaurant that contracted with DoorDash, Uber Eats, Grubhub, Seamless or Postmates and was improperly charged for delivery services.

Want breaking news at your fingertips?

Get today’s need-to-know restaurant industry intelligence. Sign up to receive texts from Restaurant Business on news and insights that matter to your brand.

Trending

More from our partners