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City steps in after third-party delivery apps overcharge restaurants, ignore fee caps

The city of Gresham stepped in to protect local restaurants after third-party delivery apps failed to adhere to fee caps set during the beginning of the COVID-19 pandemic.

Gresham restaurants that were overcharged credit card processing fees between Nov. 25, 2020, and Jan. 29, 2021, were refunded the entirety of the money they lost, accounting for an average of more than 4% of revenue.

"Gresham's restaurants have been hit particularly hard by the pandemic," said Gresham Mayor Travis Stovall. "While we're thankful for the platforms that allow our residents to continue to support our local businesses through delivery service, it's important to ensure that the fees aren't so onerous that they hurt our restaurants."

In July 2020, in response to the pandemic, the city implemented a temporary 15% fee cap on charges from third-party, app-based food delivery platforms like Grubhub and DoorDash. Under the cap, the total fees charges to restaurants, including credit card processing fees, cannot exceed 15% of the purchase price order.

But last fall, the city learned one of the platforms was charging fees in excess of the cap. Gresham issued civil penalty warnings in November 2020. When the matter remained unresolved, the city filed a lawsuit and secured a settlement.

Now businesses are getting their revenue back. One restaurant, which sells an average of $250 per day using a third-party delivery app, will see a return of about $650 from the nine-week period when the fee cap was violated.

"The city is committed to continuing to advocate for our businesses that are struggling," Stovall said.

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