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Assemblymember Alex Lee’s AB 1444 to Protect Small Businesses and Enhance Consumer Protections Crosses First Hurdle

For immediate release:

SACRAMENTO, CA - AB 1444, introduced by Assemblymember Alex Lee (D-San José), has crossed its first hurdle and made it through the Assembly Privacy and Consumer Protections Committee. Currently, listing websites such as Yelp, and third-party platforms such as Grubhub, are not informing consumers when calls are being tracked or monitored in order for these companies to charge a referral commission to the restaurant. AB 1444 would provide consumers more transparency on who they are doing business with when placing calls through listing services, and protect struggling small businesses from being charged erroneous fees.

Over 40,000 restaurants have closed their doors in California. The impacts of these closures have hit Chinese and Asian restaurants even harder due to the xenophobic narrative surrounding COVID-19. Asian restaurants had a far higher rate of closure than non-Asian restaurants and according to Wompy, roughly half of the Chinese restaurants in the U.S. have closed because of COVID-19. 

Many businesses have become more reliant on third-party food delivery platforms during COVID-19 out of necessity. Businesses required to close their indoor and outdoor dining had to quickly adopt new models in order to survive. However, small businesses are barely staying afloat with their narrow margins becoming increasingly smaller due to high fees from third-party ordering apps. 

AB 1444 requires that listing services provide clear and accurate information about contacting a restaurant so that customers know how to connect with the business directly and small businesses are able to interact with their customers without a third-party tech company rerouting or otherwise monitoring the call-in order to collect a referral commission. This bill will also ensure that restaurant owners are only charged for calls that result in orders, and not oversight errors. 

“When a call is rerouted through these third parties, customers might not be aware that when they’re calling their local restaurant to place an order, it may actually be costing the restaurant money,” said Lee. “This bill will protect the small businesses of our communities that have already been devastated by the pandemic.”

AB 1444 states:

  • A food delivery platform shall not charge a food facility a referral fee for any calls that do not result in orders.
  • A listing website does not associate a telephone number with a food facility on their internet website or application of a telephone number if that the listing website knows the use of that telephone number will result in a call rerouted through a food delivery platform.
  • A listing website shall clearly disclose if an order placed through a telephone number or other interface on their internet website or application may result in a commission or fee paid to a party other than the food facility, and shall identify the party to which that commission or fee may be paid.