Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed.

Existing law makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platforms internet website by the food facility at the time of the order or to retain any portion of amounts designated as a tip or gratuity.

This bill would also make it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

Existing law requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, among other information, the purchase price of the food and beverage, each fee charged to the customer, and any tip or gratuity.

This bill would also require a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered, unless the food delivery platform determines that the customer was responsible for the nondelivery or finds evidence indicating the refund request may be fraudulent. The bill would require the food delivery platform to refund the amount of the original paid gratuity to the customer but to not take or deduct the original gratuity amount from the delivery driver. The bill would require the food delivery platform, if it is not feasible to refund the paid gratuity in the original method of payment, to provide an alternate refund method for the gratuity.

The bill would also require the food delivery platform, if a customer receives an order that is only partially fulfilled, to charge the customer only for the portion of the order the customer received and to adjust any taxes, fees, or gratuities directly associated with the undelivered items. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed.

Existing law makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platforms internet website by the food facility at the time of the order or to retain any portion of amounts designated as a tip or gratuity.

This bill would also make it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

Existing law requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, among other information, the purchase price of the food and beverage, each fee charged to the customer, and any tip or gratuity.

This bill would also require a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered, unless the food delivery platform determines that the customer was responsible for the nondelivery or finds evidence indicating the refund request may be fraudulent. The bill would require the food delivery platform to refund the amount of the original paid gratuity to the customer but to not take or deduct the original gratuity amount from the delivery driver. The bill would require the food delivery platform, if it is not feasible to refund the paid gratuity in the original method of payment, to provide an alternate refund method for the gratuity.

The bill would also require the food delivery platform, if a customer receives an order that is only partially fulfilled, to charge the customer only for the portion of the order the customer received and to adjust any taxes, fees, or gratuities directly associated with the undelivered items. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed.

Existing law makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platforms internet website by the food facility at the time of the order or to retain any portion of amounts designated as a tip or gratuity.

This bill would also make it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

Existing law requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, among other information, the purchase price of the food and beverage, each fee charged to the customer, and any tip or gratuity.

This bill would also require a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered. delivered, unless the food delivery platform determines that the customer was responsible for the nondelivery or finds evidence indicating the refund request may be fraudulent. The bill would require the food delivery platform to refund the amount of the original paid gratuity to the customer but to not take or deduct the original gratuity amount from the delivery driver. The bill would require the food delivery platform, if it is not feasible to refund the paid gratuity in the original method of payment, to provide an alternate refund method for the gratuity.

The bill would also require the food delivery platform, if a customer receives a partial order, an order that is only partially fulfilled, to charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. portion of the order the customer received and to adjust any taxes, fees, or gratuities directly associated with the undelivered items. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed.

Existing law makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platforms internet website by the food facility at the time of the order or to retain any portion of amounts designated as a tip or gratuity.

This bill would also make it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

Existing law requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, among other information, the purchase price of the food and beverage, each fee charged to the customer, and any tip or gratuity.

This bill would also require a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered. The bill would require the food delivery platform to refund the amount of the original paid gratuity to the customer but to not take or deduct the original gratuity amount from the delivery driver. The bill would require the food delivery platform, if it is not feasible to refund the paid gratuity in the original method of payment, to provide an alternate refund method for the gratuity.

The bill would also require the food delivery platform, if a customer receives a partial order, to charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed.

Existing law makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platforms internet website by the food facility at the time of the order or to retain any portion of amounts designated as a tip or gratuity.

This bill would also make it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

Existing law requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, among other information, the purchase price of the food and beverage, each fee charged to the customer, and any tip or gratuity.

This bill would also require a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered. The bill would require the food delivery platform to refund the amount of the original paid gratuity to the customer but to not take or deduct the original gratuity amount from the delivery driver, as specified. driver. The bill would require the food delivery platform, if it is not feasible to refund the paid gratuity in the original method of payment, to provide an alternate refund method for the gratuity.

The bill would also require the food delivery platform, if a customer receives a partial order, to charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed.

Existing law makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platforms internet website by the food facility at the time of the order or to retain any portion of amounts designated as a tip or gratuity.

This bill would also make it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

Existing law requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, among other information, the purchase price of the food and beverage, each fee charged to the customer, and any tip or gratuity.

This bill would also require a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered. The The bill would require the food delivery platform to refund the amount of the original paid gratuity to the customer but to not take or deduct the original gratuity amount from the delivery driver, as specified. The bill would require the food delivery platform, if it is not feasible to refund the paid gratuity in the original method of payment, to provide an alternate refund method for the gratuity.

The bill would also require the food delivery platform, if a customer receives a partial order, to charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed. Existing

Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered. The bill would also require the food delivery platform, if a customer receives a partial order, to charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

Existing law imposes various business practice restrictions on a food delivery platform, defined as an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility, and to arrange for, or to complete, the delivery of the order, as prescribed. Existing law requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including the method of delivery.

This bill would require a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The bill would authorize the food delivery platform to use an automated system to address customer service concerns. However, if the automated system is unable to address the customers concerns, the bill would require the food delivery platform to ensure that the customer is able to promptly connect with the natural person in order to address the concern.

The bill would further require a food delivery platform to provide a full refund to the customer if an order is not delivered or the wrong order is delivered. The bill would also require the food delivery platform, if a customer receives a partial order, to charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. The bill would additionally require the food delivery platform to provide a mechanism that allows the customer to adjust a gratuity that was included in the order prior to its delivery and request that the amount of the refund be returned to the original method of payment.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 578

Author:(Bauer-Kahan)

As Amended Ver:July 16, 2025

Majority vote

SUMMARY

Food delivery platforms must implement a refund mechanism to address issues such as missed, partially delivered, or incorrect orders. They must also provide a clear way for consumers to contact a live customer service representative. Additionally, platforms are required to uphold fair payment practices for delivery personnel and ensure greater transparency regarding their earnings.

Senate Amendments

1. Clarify that it does not prohibit a food delivery platform from removing a customer from the platform if the platform has a reasonable suspicion that the customer has committed or is committing fraud.
2. Clarify that refunds are subject to whether the food delivery platform is able to determine that either customer was responsible for the nondelivery or finds evidence indicating the refund request may be fraudulent.
3. Clarify that for a partially fulfilled order that the food delivery platform must charge the customer only for the portion of the order the customer received. Any taxes, fees, or gratuities directly associated with the undelivered items shall be adjusted to reflect the reduced order.

COMMENTS

Unclear refund policies. Grubhub, DoorDash, and Uber Eats dominate the food delivery market, yet none of these platforms have a clear refund policy. All three state that sales are final, and refunds are issued at their discretion, with no obligation to provide reimbursement.^[1],[2],[3] Last year, a Rocklin resident was unable to receive a refund from DoorDash for virtual reality goggles he ordered through the platform because of their ″no obligation to issue a refund″.^[4] Although the retailer refunded DoorDash for the purchase, the platform failed to pass the refund on to the customer until after the case received public attention.

These unclear refund policies become increasingly complicated for deliveries that are either wrong or incomplete. Consumers typically pay tips, service charges, and other fees upfront, assuming their orders will be fulfilled correctly. If an order is incomplete, the consumer may receive a refund for the missing items, but may not be reimbursed for associated tips and fees. For example, consider an order for ten pizzas totaling $200 and the consumer pays an additional $100 for the fees and tip. If only one of those pizzas is delivered, then the consumer would likely be refunded for the $180 of pizza that was not delivered, but it is unclear with current policies in place if the consumer can be refunded any amount of the $100 used for the tip and fees paid corresponding to the original $200 order, not the $20 order that was actually delivered.

This is further compounded by the increasing reliance on chatbots to assist with customer service. Many consumers find these automated systems frustrating, particularly when dealing with complex refund request. Reports from last year showed that 45% of American consumers had an unfavorable feeling toward the use of chatbots for customer service while only 19% were favorable.^[5] Chatbots can become increasingly difficult to work with if they are trained to respond in ways that align with the platform′s policies, especially if the policies, such as those for refunds, are unclear. This is likely why about 60% of people prefer live chats with human customer service agents over a chatbot.^[6]

Unfair payment practices. The scope of the bill was expanded to address unfair wage practices. The Attorneys General for both Illinois and New York have reached settlements with DoorDash regarding their use of tips to offset guaranteed pay.^[7] The New York AG′s investigation found that DoorDash was using a deceptive pay model whereby delivery drivers were only able to see their tips if the tip was greater than the payment amount DoorDash guaranteed. For example, if a driver was guaranteed $10 and the customer tipped $4, the driver would be paid $10 with the customer contributing $4 and DoorDash contributing $6. These cases resulted in a $16.25 million settlement in NY and a $11.25 million settlement in Illinois.^[8],[9] These types of practices may exist in California because the law currently only prohibits the retaining of any tip or gratuity, and as the gratuity is not retained by DoorDash, it may not violate the law, but arguably it violates the Legislature′s intent.

Please see the policy committee analysis for a full discussion of this bill.

According to the Author

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

Arguments in Support

The California Low-Income Consumer Coalition writes:

As food delivery has become a frequent part of daily life, consumers have grown increasingly reliant on third-party delivery platforms. Unfortunately, with that increase has come a growing number of concerns regarding business practices and an increase in complaints: missing items, incorrect orders, or undelivered meals. Some platforms offer only partial credits, refuse to issue refunds, or force consumers into automated customer services processes that do not solve the problem.

Currently, customers bear the financial risk of failures that they did not cause. AB 578 ensures that consumers are provided with a refund in their original payment method, not just a credit to be used at a later time for a service they may no longer wish to use. AB 578 further ensures customers have access to a live customer service representative to address any issue with the order, not an inescapable chatbot labyrinth.

Consumers deserve the same protections when ordering food online that they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. AB 578 provides a simple but crucial safeguard in an increasingly digital marketplace.

Arguments in Opposition

The Bay Area Council Writes:

AB 578 includes a burdensome and complex requirement to prorate and refund delivery fees — which could drive up costs for both platforms and restaurants, and could make disputes harder to resolve, increasing administrative burdens and adding financial strain at a time when many are already operating on thin margins. Delivery platforms are already incentivized to take a thoughtful and balanced approach to refund policies — considering both customer satisfaction and the interests of their restaurant partners. Mandating specific refund outcomes could disrupt this balance, reduce platforms′ ability to tailor policies to complex, real-world situations, and ultimately lead to administrative headaches and higher costs for restaurants. We are also concerned that instead of improving service for consumers, this bill could add unnecessary complexity that would ripple through the entire food delivery ecosystem and harm restaurants, delivery drivers, and customers alike.

FISCAL COMMENTS

Not applicable.

VOTES:

ASM PRIVACY AND CONSUMER PROTECTION: 14-0-1

YES: Bauer-Kahan, Dixon, Bryan, DeMaio, Ellis, Irwin, Lowenthal, McKinnor, Ortega, Pellerin, Petrie-Norris, Ward, Wicks, Wilson

ABS, ABST OR NV: Patterson

ASSEMBLY FLOOR: 63-2-14

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Chen, Connolly, Davies, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Mark González, Haney, Harabedian, Hart, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO: DeMaio, Macedo

ABS, ABST OR NV: Bains, Castillo, Dixon, Flora, Gallagher, Jeff Gonzalez, Hadwick, Hoover, Lackey, Papan, Patterson, Sanchez, Soria, Tangipa

UPDATED

VERSION: July 16, 2025

CONSULTANT: John Bennett / P. & C.P. / (916) 319-2200 FN: 0001561

1. DoorDash, “Consumer Terms and Conditions,” https://help.doordash.com/legal/document?type=cx-terms-and-conditions&region=US&locale=en-US, Accessed on Mar. 10, 2025. ↑

2. Uber, “U.S. Terms of Use,” https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=united-states&lang=en, Accessed on Mar. 10, 2025. ↑

3. Grubhub, “Terms of Use,” https://www.grubhub.com/legal/terms-of-use, Accessed on Mar. 10, 2025 ↑

4. Kurtis Ming and Kevin Wing, “DoorDash now delivers electronics; viewer got stiffed on $500 refund”, CBS News (July 1, 2024) , https://www.cbsnews.com/sacramento/news/doordash-now-delivers-electronics-viewer-got-stiffed-on-500-refund-call-kurtis-investigates/ ↑

5. Jason Collins, “Customer Service Chatbots Earn Mixed Reviews as People Still Prefer Human Conversations,” Civic Science (July 24. 2024), https://civicscience.com/customer-service-chatbots-earn-mixed-reviews-as-people-still-prefer-human-conversations/#:~:text=Customer%20Service%20Satisfaction%20Across%20the%20Board%20Is%20Mixed&text=CivicScience%20learned%20that%2C%20in%20general,those%20who%20were%20not%20satisfied. ↑

6. Danielle Commisso, “Do Chatbots Live Up to the Hype? Consumers Weigh In,”, Civic Science (Apr. 28, 2022). https://civicscience.com/do-chatbots-live-up-to-the-hype-consumers-weigh-in/ ↑

7. New York State Attorney General, “Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips,” https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers Accessed on Mar. 10, 2025. ↑

8. Ibid. ↑

9. Office of the Illinois Attorney General, “ATTORNEY GENERAL RAOUL ANNOUNCES $11.25 MILLION SETTLEMENT AGREEMENT WITH DOORDASH OVER DELIVERY DRIVER TIPS,” https://illinoisattorneygeneral.gov/news/story/attorney-general-raoul-announces-1125-million-settlement-agreement-with-doordash-over-delivery-driver-tips Accessed on Mar. 10, 2025. ↑

 THIRD READING  

Bill No: AB 578

Author: Bauer-Kahan (D)

Amended: 7/3/25 in Senate

Vote: 21

SENATE JUDICIARY COMMITTEE: 11-0, 7/1/25

AYES: Umberg, Allen, Arreguín, Ashby, Caballero, Durazo, Laird, Stern, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Niello, Valladares

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 7-1, 7/14/25

AYES: Ashby, Archuleta, Grayson, Menjivar, Smallwood-Cuevas, Umberg, Weber Pierson

NOES: Strickland

NO VOTE RECORDED: Choi, Arreguín, Niello

ASSEMBLY FLOOR: 63-2, 5/19/25 - See last page for vote

SUBJECT: Food delivery platforms: customer service

SOURCE: Author

DIGEST:

This bill strengthens the Fair Food Delivery Act (Act). It provides protections and transparency for delivery people’s compensation and establishes refund protections for consumers. This bill also requires food delivery platforms to provide for customer service features that allow access to a natural person, as provided.

ANALYSIS:

Existing law:

1. Establishes the Act, which prohibits food delivery platforms, as defined, from arranging for the delivery of an order from a food facility, as defined, without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (Business Bus. & Prof. Code § 22598 et seq.)^[1]
2. Defines the relevant terms, including:
   1. “Food delivery platform” means an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility and to arrange for, or to complete, the delivery of the order from the food facility to the consumer.
   2. “Online order” means an order for food or beverage placed by a customer through or with the assistance of a food delivery platform, including, but not limited to, a telephone order, for delivery. (§ 22598.)
3. Makes it unlawful for a food delivery platform to do the following:
   1. Charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platform’s internet website by the food facility at the time of the order.
   2. Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity for a delivery order shall be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage. Any tip or gratuity for a pickup order shall be paid by a food delivery platform, in its entirety, to the food facility. (§ 22599.1(a).)
4. Requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including all of the following information:
   1. The purchase price of the food and beverage.
   2. A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.
   3. Each fee, commission, and any other cost charged to the customer by the food delivery platform; and
   4. Any tip or gratuity payable to the delivery driver or food facility. (§ 22599.1(b).)
5. Requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including all of the following:
   1. The method of delivery.
   2. The anticipated date and time of the delivery of the order.
   3. Confirmation that the order has been successfully delivered or that the delivery cannot be completed. (§ 22599.1(d).)

This bill:

1. Makes it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.
2. Requires a food delivery platform to do the following:
   1. Prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.
   2. Include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The food delivery platform may use an automated system to address customer service concerns. However, if the automated system is unable to address the customer’s concerns, the food delivery platform shall ensure that the customer is able to promptly connect with the natural person in order to address the concern.
   3. Provide a full refund, including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered, unless the platform determines that the customer was responsible for the nondelivery or finds evidence indicating the refund request may be fraudulent. It shall refund the amount of the original paid gratuity to the customer but shall not take or deduct the original gratuity amount from the delivery driver.
3. Provides that if it is not feasible for the food delivery platform to refund the paid gratuity to the customer in the original method of payment, the platform shall provide an alternate refund method for the paid gratuity.
4. Requires a platform, if a customer receives an order that is only partially fulfilled, to do the following:
   1. Charge the customer only for the portion of the order the customer received. Any taxes, fees, or gratuities directly associated with the undelivered items shall be adjusted to reflect the reduced order.
   2. Provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
5. Along with any other refund options, the food delivery platform shall provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.
6. Clarifies that it does not prohibit a food delivery platform from removing a customer from the platform if the platform has a reasonable suspicion that the customer has committed or is committing fraud.

Background

While third party app-based food delivery companies, such as DoorDash, Uber Eats, and Grubhub, offer the promise of convenient and safe access to a variety of restaurants at the click of a button, these companies’ success has presented a number of issues for restaurants, customers, and delivery workers. To protect restaurants and customers, the Legislature enacted the Fair Food Delivery Act of 2020 (AB 2149 (Gonzalez, Chapter 125, Statutes of 2020)) (Act), which prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. Several measures have since bolstered the Act.

This bill seeks to build on the protections of the Act for both customers and delivery workers. It prohibits offsetting the base pay of a delivery person based on gratuities or tips and requires food delivery platforms to disclose to a delivery worker an itemized breakdown of their pay. This bill also addresses situations where a customer’s accurate order is not fully delivered, imposing requirements on platforms to provide refunds, as specified. Platforms must also provide access to a customer service representative that is a natural person, as provided. This bill is author-sponsored and supported by the California Federation of Labor Unions and Uber. It is opposed by various business and tech organizations.

Comment

According to the author:

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

Strengthening the protections of the Fair Food Delivery Act. Despite existing laws, concerns within the industry regarding anti-competitive practices, and opaque and manipulative fees continue to be expressed and litigated. Los Angeles County brought an enforcement action against a leading food delivery platform, Grubhub, alleging false and deceptive advertising, misrepresentation and unfair business practices that financially harm consumers, delivery drivers, and restaurants.^[2]

The Federal Trade Commission also recently took action against Grubhub, reaching a settlement based on allegations of unlawful practices:

Grubhub will pay $25 million to settle charges from the Federal Trade Commission and the Illinois Attorney General that the food delivery firm engaged in an array of unlawful practices including deceiving diners about delivery costs and blocking their access to their accounts and funds, deceiving workers about how much money they would make delivering food, and unfairly and deceptively listing restaurants on its platform without their permission.

Under the proposed settlement, the company must make substantial changes to its operations across a number of areas, including telling consumers the full cost of delivery, honestly advertising pay for drivers, and listing restaurants on its platform only with their consent.^[3]

Earlier this year, the New York Attorney General announced the conclusion of its own action against another platform, DoorDash:

New York Attorney General Letitia James today announced a $16.75 million settlement with delivery platform DoorDash for misleading both consumers and delivery workers (known as “Dashers”) by using tips intended for Dashers to subsidize their guaranteed pay. Between May 2017 and September 2019, DoorDash used a guaranteed pay model that let Dashers see how much they would be paid before accepting a delivery. An Office of the Attorney General (OAG) investigation found that under this model, DoorDash used customer tips to offset the base pay it had already guaranteed to workers, instead of giving workers the full tips they rightfully earned. DoorDash will pay $16.75 million in restitution for Dashers and up to $1 million in settlement administrator costs to help issue the payments.^[4]

This bill bolsters the protections of the Act in order to address some of these lingering issues in the industry.

First, this bill directly addresses the focus of the New York settlement by prohibiting food delivery platforms from maintaining a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage. To ensure more transparency for these delivery workers, this bill requires food delivery platforms to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Second, this bill provides stronger protections for consumers when their orders are not delivered, the wrong order is delivered, or only partially delivered. Finally, to ensure consumers are able to voice issues and report incidents effectively, this bill requires food delivery platforms to provide a feature that allows a customer to contact a natural person, allowing for the platforms to utilize an automated system to first attempt to triage the issue.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 7/16/25)

California Federation of Labor Unions, AFL-CIO

California Low-Income Consumer Coalition

Uber Technologies, INC.

UFCW - Western States Council

OPPOSITION: (Verified 7/16/25)

Cal Asian Chamber of Commerce

Grubhub

Chamber of Progress

ARGUMENTS IN SUPPORT: The California Low-Income Consumer Coalition writes:

As food delivery has become a frequent part of daily life, consumers have grown increasingly reliant on third-party delivery platforms. Unfortunately, with that increase has come a growing number of concerns regarding business practices and an increase in complaints: missing items, incorrect orders, or undelivered meals. Some platforms offer only partial credits, refuse to issue refunds, or force consumers into automated customer services processes that do not solve the problem.

Currently, customers bear the financial risk of failures that they did not cause. AB 578 ensures that consumers are provided with a refund in their original payment method, not just a credit to be used at a later time for a service they may no longer wish to use. AB 578 further ensures customers have access to a live customer service representative to address any issue with the order, not an inescapable chatbot labyrinth.

Consumers deserve the same protections when ordering food online that they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. AB 578 provides a simple but crucial safeguard in an increasingly digital marketplace.

ARGUMENTS IN OPPOSITION: The Cal Asia Chamber of Commerce Writes:

We are particularly concerned that AB 578 would impose rigid requirements that fail to account for the operational realities of food delivery platforms. The “natural person” customer service requirements would force platforms to develop new systems and shift resources to comply, potentially increasing customer service wait times. Meanwhile, the bill's mandate for full refunds on partial orders regardless of circumstances could lead to abuse and create unnecessarily complex prorating requirements for taxes, commissions, and fees.

ASSEMBLY FLOOR: 63-2, 5/19/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Chen, Connolly, Davies, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Mark González, Haney, Harabedian, Hart, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NOES: DeMaio, Macedo

NO VOTE RECORDED: Bains, Castillo, Dixon, Flora, Gallagher, Jeff Gonzalez, Hadwick, Hoover, Lackey, Papan, Patterson, Sanchez, Soria, Tangipa

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

7/16/25 16:22:42

**** END ****

1. All further section references are to the Business and Professions Code unless otherwise indicated. ↑

2. LA County Sues Grubhub Alleging Unfair and Deceptive Business Practices, Office of the County Counsel, Los Angeles, https://counsel.lacounty.gov/la-county-sues-grubhub-alleging-unfair-and-deceptive-business-practices/. ↑

3. Case Summary, Grubhub Inc., FTC and Illinois v. (December 31, 2024) FTC, https://www.ftc.gov/legal-library/browse/cases-proceedings/202-3157-grubhub-inc-ftc-illinois-v. ↑

4. Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips (February 24, 2025) Office of the New York State Attorney General, https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers. ↑

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Angelique Ashby, Chair

2025 - 2026 Regular

Bill No: Hearing Date: July 14, 2025

Subject:

SUMMARY:

Makes various updates to employee compensation and customer refund requirements for food delivery platforms.

NOTE: This measure was previously heard in the Senate Committee on Judiciary on July 1, 2025. The bill passed with a vote of 11-0.

Existing law:

1. Prohibits food delivery platforms, as defined, from arranging for the delivery of an order from a food facility, as defined, without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (Business and Professions Code (BPC) § 22599)
2. Prohibits a food delivery platform from charging a customer a higher food or beverage purchase price than the price posted on the food delivery platform’s website by the food facility at the time of the order. (BPC § 22599.1)
3. Prohibits a food delivery platform from retaining any portion of amounts designated as a tip or gratuity. Requires a food delivery platform to pay the person delivering food or beverage any tip or gratuity, in its entirety, for a delivery order. Specifies that a food delivery platform must pay a food facility any tip or gratuity, in its entirety, for a pickup order.(Id.)
4. Requires a food delivery platform to disclose an accurate, clearly identified, and itemized cost breakdown of each transaction to the customer and to the food facility that includes, but is not limited to:
5. The purchase price of the food and beverage. Defines purchase price as the price, as listed on the menu, for the items contained in an online order, excluding taxes or gratuities that may make up the total amount charged to the customer of an online order.
6. A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.
7. Each fee, commission, or cost the food delivery platform charges the customer.
8. Any tip or gratuity. (Id.)
9. Requires a food delivery platform to clearly and regularly disclose the status of the order to the food facility and the customer, including the method of delivery; the anticipated date and time the order will be delivered and; confirmation that the order has been successfully delivered or that the delivery cannot be completed.
   
10. Establishes the Unfair Competition Law, which provides a statutory cause of action for any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising, including over the internet. (BPC § 17200 et seq.)

This bill:

1. Specifies that it is unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.
2. Requires a food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including, but not limited to, the base pay, gratuity or tips, and any promotional bonuses.
3. Requires a food delivery platform to include a clear and conspicuous customer service feature that allows a customer to contact a natural person. Authorizes the food delivery platform to use an automated system to address customer service concerns but specifies if the automated system is unable to address the customer’s concerns, the food delivery platform must ensure that the customer is able to promptly connect with the natural person in order to address the concern.
4. Requires a food delivery platform to provide a full refund, including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered. Specifies that while the customer can receive a refund for the amount of the original gratuity they paid, the food delivery platform is prohibited from taking or deducting the original gratuity amount from the delivery driver.
5. Clarifies that if it is not feasible for the food delivery platform to refund the paid gratuity to the customer in the original method of payment, the food delivery platform must provide an alternate refund method for the paid gratuity.
6. Requires, in the event that a customer receives a partial order, the food delivery platform to:
7. Only charge the customer for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order.
8. Provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
9. Requires a food delivery platform to, along with any other refund options, provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.
10. Specifies that a food delivery platform is still authorized to remove a customer from the platform if the platform has a reasonable suspicion that the customer has committed or is committing fraud.

FISCAL EFFECT:

Unknown. This bill is not keyed fiscal by Legislative Counsel.

COMMENTS:

1. Purpose. The Author is the Sponsor of this bill. According to the Author, “The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.”

The Author states that “This bill seeks to address common issues with food delivery services, including lack of accountability for undelivered orders, difficulty reaching customer service, and inflexible tipping policies. When their orders do not arrive, customers struggle to obtain a full refund because of unfair and unclear policies. Additionally, customer service options are often limited to an automated system, making it difficult to resolve issues. Furthermore, tipping is typically required at time of transaction often leaving customers unable to adjust gratuity based on service quality.”

1. Background. Food delivery platforms provide an alternative for restaurants that may not wish to employ their own delivery professionals, but want to be able to serve customers at home. Delivery platforms are businesses and attach fees to deliveries—for consumers and for restaurants alike. Different apps have different approaches to setting prices both for consumers and in terms of the fees they charge businesses. Restaurants experienced significant hardship throughout the COVID-19 pandemic and have continued to struggle, particularly with rising costs at every level of operating a small business as so many California restaurants are. Sales through third-party online delivery services grew dramatically in 2020, growing by 122% in an industry that saw major growth even prior to the pandemic.

Third-party delivery platforms faced heightened scrutiny for a number of practices as they became more prevalent during and following the COVID-19 pandemic, including unauthorized listings, or "ghost" restaurant pages created without a restaurant’s consent; excessive commissions and fees, sometimes exceeding 30 percent; lack of data sharing, limiting restaurants' ability to market to their customers and; impacts on delivery drivers. Local jurisdictions passed ordinances limiting or prohibiting certain food delivery platform practices and in 2020, the Legislature passed the Fair Food Delivery Act (Act) (AB 2149, Gonzalez, Chapter 125, Statutes of 2020). The law prohibits a food delivery platform from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. A violation of the law constitutes an unfair business practice under the Unfair Competition Law.

The Act has been amended several times since then to address ongoing concerns about specific practices. AB 286 (Gonzalez, Chapter 513, Statutes of 2021) dealt with pricing and wages by prohibiting a food delivery platform from marking up the price of the food and beverages it delivers or retaining tips or gratuities it receives. AB 286 required food delivery platforms to provide itemized cost breakdowns to customers and food facilities that includes the purchase price of the food and beverage; a notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, except as specified; each fee, commission, or cost charged to the customer by the food delivery platform; and any tip or gratuity. AB 502 (Lee, Chapter 164, Statutes of 2023) addressed issues with consumer communications intended for food facilities that are placed through a listing website. It prohibits such websites from associating methods of communication with a food facility where they know that use of that method will result in a “forwarded call,” as defined. AB 502 also established certain disclosures with respect to fees, commissions, and other costs in connection with orders placed through such websites. SB 1490 (Durazo, Chapter 898, Statutes of 2024) further addressed purchase prices by excluding fees and commissions from the definition of purchase price and allowing food facilities to have a mechanism to direct the platform to disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility. The bill further expanded information provided to a food facility prior to the facility signing an agreement with a platform. SB 2490 also required a food delivery platform to clearly and regularly disclose the status of the order to the food facility and the customer, including the method of delivery; the anticipated date and time the order will be delivered and; confirmation that the order has been successfully delivered or that the delivery cannot be completed.

1. Arguments in Support. Supporters write that “As food delivery has become a frequent part of daily life, consumers have grown increasingly reliant on third-party delivery platforms. Unfortunately, with that increase has come a growing number of concerns regarding business practices and the treatment of drivers. There has been an increase in complaints: missing items, incorrect orders, or undelivered meals. Some platforms offer only partial credits, refuse to issue refunds, or force consumers into automated customer services processes that often go unresolved…Consumers and drivers deserve the same protection when ordering food online as they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. Drivers also deserve the labor protections that cover restaurants and all other workers to ensure they are paid the tips they earned even after a refund.”

Uber Technologies, Inc, “writes in support of AB 578, which would establish minimum customer service standards for food delivery platforms such as those operated by Uber Eats. Among these standards are providing access to a live person, and off ering a full or partial refund when an order isn’t received or is incorrect. In addition, the bill provides for a mechanism for a customer to request a refund to their original method of payment - all customer service standards that Uber proudly meets. We also appreciate your recent amendment that recognizes the importance of ensuring delivery drivers keep tips that have already been paid out to them.”

1. Arguments in Opposition. The California Chamber of Commerce and Technet are concerned that the bill does not address potential fraud by a customer who ordered food, in the refund provisions of the bill, and requests amendments to clarify that the bill is not intended to prohibit fraud prevention efforts in those rare cases where they are necessary. According to the organizations, at a functional level, some of the refund requirements related to fees are unworkable. They state that “some of the fees associated with delivery are not percentage-based and thus cannot be “pro-rated” ... notably there may be a flat fee to delivery orders below a certain total value. We also have concerns with the bill’s focus on refunding or altering gratuities. The gratuity for an order is customarily already provided to the delivery person by the time a refund or complaint is made – meaning that unpacking that transaction and re-claiming a gratuity may not be feasible for the delivery platform. They also cite concerns with operationalizing the requirement for someone to be promptly connected to a customer service and how to include a feature to allow customers to reach a natural person on the limited screen space of a mobile app.

The Cal Asian Chamber of Commerce, California African American Chamber of Commerce, California Black Chamber of Commerce, and California Hispanic Chambers of Commerce state that AB 578 includes a burdensome and complex requirement to prorate and refund delivery fees, which could drive up costs for both platforms and restaurants, making disputes harder to resolve and increasing administrative burdens and financial strain at a time when many are already operating on thin margins. According to the groups, delivery platforms are already incentivized to take a thoughtful and balanced approach to refund policies, considering both customer satisfaction and the interests of their restaurant partners. Mandating specific refund outcomes could disrupt this balance, reduce platforms’ ability to tailor policies to complex, real-world situations, and ultimately lead to administrative headaches and higher costs for restaurants. We are also concerned that, instead of improving service for consumers, this bill could introduce unnecessary complexity that would ripple through the entire food delivery ecosystem, harming restaurants, delivery drivers, and customers alike. AB 578 would also reward bad actors, incentivize abuse, and leave delivery platforms and restaurants liable for the behavior, driving up costs for everyone. For example, the bill requires platforms to provide a full refund when an order is not delivered, even when the consumer is at fault, including cases where the consumer fails to answer their door, enters the wrong address, or engages in suspected fraud. Similarly, the bill mandates that a consumer’s tip be provided to the delivery worker even when the worker’s misconduct – for example, stealing the order – results in the failed delivery.

Gruhub writes that “the requirement for platforms to provide full refunds, including all taxes, commissions, fees, and gratuities, in the manner outlined in AB 578, in all cases where consumers report incorrect or non-delivery, could lead to increased operational costs for platforms and restaurants. These costs are likely to be passed on to consumers, resulting in higher prices for food delivery services.” Grubhub notes that the goals the bill are commendable, and urges the Author to consider the potential economic impact on consumers, couriers, and small businesses operating on and utilizing the food delivery marketplace. A more balanced approach, which includes input from all stakeholders, could achieve the desired outcomes without imposing undue burdens on the industry.”

1. Author’s amendments. In order to ensure that platforms have a mechanism to address fraudulent refund requests and to clarify provisions related to prorating, the bill will be amended according to the following:

22599.2.

 (a) A food delivery platform shall provide a full refund, including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered unless the food delivery platform determines that the customer was responsible for the non-delivery or finds evidence indicating the refund request may be fraudulent.

(b) The food delivery platform shall refund the amount of the original paid gratuity to the customer but shall not take or deduct the original gratuity amount from the delivery driver.

(c) If it is not feasible for the food delivery platform to refund the paid gratuity to the customer in the original method of payment, the food delivery platform shall provide an alternate refund method for the paid gratuity.

(d) In the event that a customer receives a partial order an order that is only partially fulfilled, the food delivery platform shall do the following:

(1) Charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order. portion of the order the customer received. Any taxes, fees, or gratuities directly associated with the undelivered items shall be adjusted to reflect the reduced order

(2) Provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.

(e) Along with any other refund options, the food delivery platform shall provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.

(f) This section does not prohibit a food delivery platform from removing a customer from the platform if the platform has a reasonable suspicion that the customer has committed or is committing fraud.

SUPPORT AND OPPOSITION:

Support:

California Federation of Labor Unions, AFL-CIO

California Low-income Consumer Coalition
Uber Technologies, INC.
UFCW- Western States Council

Opposition:

Bay Area Council

Cal Asian Chamber of Commerce

California African American Chamber of Commerce

California Black Chamber of Commerce

California Chamber of Commerce

California Hispanic Chambers of Commerce

Chamber of Progress

Grubhub

Technet

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2025-2026 Regular Session

Bill No: AB 578 (Author:Bauer-Kahan)

Version: June 12, 2025

Hearing Date: July 1, 2025

Fiscal: No

Urgency: No

Consultant: CK

SUBJECT

Food delivery platforms: customer service

DIGEST

This bill strengthens the Fair Food Delivery Act. It provides protections and transparency for delivery people’s compensation and establishes refund protections for consumers. This bill also requires food delivery platforms to provide for customer service features that allow access to a natural person, as provided.

EXECUTIVE SUMMARY

While third party app-based food delivery companies, such as DoorDash, Uber Eats, and Grubhub, offer the promise of convenient and safe access to a variety of restaurants at the click of a button, these companies’ success has presented a number of issues for restaurants, customers, and delivery workers. To protect restaurants and customers, the Legislature enacted the Fair Food Delivery Act of 2020 (AB 2149 (Gonzalez, Ch. 125, Stats. 2020)) (Act), which prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. Several measures have since bolstered the Act.

This bill seeks to build on the protections of the Act for both customers and delivery workers. It prohibits offsetting the base pay of a delivery person based on gratuities or tips and requires food delivery platforms to disclose to a delivery worker an itemized breakdown of their pay. The bill also addresses situations where a customer’s accurate order is not fully delivered, imposing requirements on platforms to provide refunds, as specified. Platforms must also provide access to a customer service representative that is a natural person, as provided. The bill is author-sponsored and supported by the California Federation of Labor Unions and Uber. It is opposed by various business and tech organizations, including Technet. If the bill passes this Committee, it will next be heard in the Senate Committee on Business, Professions and Economic Development.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the Act, which prohibits food delivery platforms, as defined, from arranging for the delivery of an order from a food facility, as defined, without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (Bus. & Prof. Code § 22598 et seq.)^[1]
2. Defines the relevant terms, including:
   1. “Food delivery platform” means an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility and to arrange for, or to complete, the delivery of the order from the food facility to the consumer.
   2. “Online order” means an order for food or beverage placed by a customer through or with the assistance of a food delivery platform, including, but not limited to, a telephone order, for delivery. (§ 22598.)
3. Makes it unlawful for a food delivery platform to do the following:
   1. Charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platform’s internet website by the food facility at the time of the order.
   2. Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity for a delivery order shall be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage. Any tip or gratuity for a pickup order shall be paid by a food delivery platform, in its entirety, to the food facility. (§ 22599.1(a).)
4. Requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including all of the following information:
   1. The purchase price of the food and beverage.
   2. A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.
   3. Each fee, commission, and any other cost charged to the customer by the food delivery platform; and
   4. Any tip or gratuity payable to the delivery driver or food facility. (§ 22599.1(b).)
5. Requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including all of the following:
   1. The method of delivery.
   2. The anticipated date and time of the delivery of the order.
   3. Confirmation that the order has been successfully delivered or that the delivery cannot be completed. (§ 22599.1(d).)

This bill:

1. Makes it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.
2. Requires a food delivery platform to do the following:
   1. Prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.
   2. Include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The food delivery platform may use an automated system to address customer service concerns. However, if the automated system is unable to address the customer’s concerns, the food delivery platform shall ensure that the customer is able to promptly connect with the natural person in order to address the concern.
   3. Provide a full refund, including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered. It shall refund the amount of the original paid gratuity to the customer but shall not take or deduct the original gratuity amount from the delivery driver.
3. Provides that if it is not feasible for the food delivery platform to refund the paid gratuity to the customer in the original method of payment, the platform shall provide an alternate refund method for the paid gratuity.
4. Requires a platform, if a customer receives a partial order, to do the following:
   1. Charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order.
   2. Provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
5. Along with any other refund options, the food delivery platform shall provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.

COMMENTS

1. Food delivery platforms and the Fair Food Delivery Act of 2020

The COVID-19 pandemic decimated the restaurant industry. Millions of employees were laid off or furloughed and approximately four in 10 restaurants closed.^[2] Meanwhile, sales through third-party online delivery services, already a major growth industry before the pandemic, surged dramatically, growing by 122 percent in 2020.^[3] Although these services can conveniently and safely connect restaurants with customers, they can be costly—commissions are often around 30 percent of the sale price, and there may be additional fees^[4]—and a poor fit for some restaurants.^[5] In an industry known for thin profit margins, this impact to revenues can be a formidable barrier to sustained financial viability.

Several lawsuits against food delivery platforms have been filed across the country alleging, among other unscrupulous behaviors, unfair business practices, labor violations, and the misuse of restaurants’ names and logos.^[6] One type of predatory practice involved listing restaurants on food delivery websites without their consent,^[7] which risks overwhelming restaurant operations, creating quality and safety problems, and eroding customer bases.

In response, the Legislature adopted the Fair Food Delivery Act of 2020. The Act prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (§ 22599.) A violation of the Act constitutes an unfair business practice under the Unfair Competition Law.^[8] A number of updates have occurred in the years since.

AB 286 (Gonzalez, Ch. 513, Stats. 2021) expanded the Act by prohibiting a food delivery platform from marking up the price of the food and beverages it delivers or retaining tips or gratuities it receives. AB 286 also requires food delivery platforms to provide itemized cost breakdowns to customers and food facilities that includes the purchase price of the food and beverage; a notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, except as specified; each fee, commission, or cost charged to the customer by the food delivery platform; and any tip or gratuity.

AB 502 (Lee, Ch. 164, Stats. 2023) addressed issues with consumer communications intended for food facilities that are placed through a listing website. It prohibits such websites from associating methods of communication with a food facility where they know that use of that method will result in a “forwarded call,” as defined. AB 502 also requires certain disclosures with respect to fees, commissions, and other costs in connection with orders placed through such websites.

Just last year, SB 1490 (Durazo, Ch. 898, Stats. 2024) bolstered the protections of the Act by requiring platforms to disclose to consumers and restaurants the status of deliveries and to inform the food facilities of specified details, including information about how errors are handled and charged and the various fees and features involved with a platform’s various plans. It also requires platforms to provide facilities a mechanism for removing themselves and for directing the platform to disclose to consumers the delivery fee charged to the facility.

1. Strengthening the protections of the Fair Food Delivery Act

Despite these laws, concerns within the industry regarding anti-competitive practices, and opaque and manipulative fees continue to be expressed and litigated. Los Angeles County brought an enforcement action against a leading food delivery platform, Grubhub, alleging false and deceptive advertising, misrepresentation and unfair business practices that financially harm consumers, delivery drivers, and restaurants.^[9]

The Federal Trade Commission also recently took action against Grubhub, reaching a settlement based on allegations of unlawful practices:

Grubhub will pay $25 million to settle charges from the Federal Trade Commission and the Illinois Attorney General that the food delivery firm engaged in an array of unlawful practices including deceiving diners about delivery costs and blocking their access to their accounts and funds, deceiving workers about how much money they would make delivering food, and unfairly and deceptively listing restaurants on its platform without their permission.

Under the proposed settlement, the company must make substantial changes to its operations across a number of areas, including telling consumers the full cost of delivery, honestly advertising pay for drivers, and listing restaurants on its platform only with their consent.^[10]

Earlier this year, the New York Attorney General announced the conclusion of its own action against another platform, DoorDash:

New York Attorney General Letitia James today announced a $16.75 million settlement with delivery platform DoorDash for misleading both consumers and delivery workers (known as “Dashers”) by using tips intended for Dashers to subsidize their guaranteed pay. Between May 2017 and September 2019, DoorDash used a guaranteed pay model that let Dashers see how much they would be paid before accepting a delivery. An Office of the Attorney General (OAG) investigation found that under this model, DoorDash used customer tips to offset the base pay it had already guaranteed to workers, instead of giving workers the full tips they rightfully earned. DoorDash will pay $16.75 million in restitution for Dashers and up to $1 million in settlement administrator costs to help issue the payments.^[11]

This bill bolsters the protections of the Act in order to address some of these lingering issues in the industry.

First, the bill directly addresses the focus of the New York settlement by prohibiting food delivery platforms from maintaining a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage. To ensure more transparency for these delivery workers, the bill requires food delivery platforms to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Second, the bill provides stronger protections for consumers when their orders are not delivered or the wrong order is delivered. It requires platforms to provide a full refund, including all taxes, commissions, fees, and gratuities, as specified, to the customer if an order is not delivered or the wrong order is delivered. Along with any other refund options, the food delivery platform must provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment. If the consumer receives a partial order, the platform may only charge a prorated amount and the consumer must be able to adjust the gratuity included prior to the incomplete delivery.

Finally, to ensure consumers are able to voice issues and report incidents effectively, the bill requires food delivery platforms to provide a feature that allows a customer to contact a natural person, allowing for the platforms to utilize an automated system to first attempt to triage the issue.

According to the author:

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

1. Stakeholder positions

The California Low-Income Consumer Coalition writes in support:

As food delivery has become a frequent part of daily life, consumers have grown increasingly reliant on third-party delivery platforms. Unfortunately, with that increase has come a growing number of concerns regarding business practices and an increase in complaints: missing items, incorrect orders, or undelivered meals. Some platforms offer only partial credits, refuse to issue refunds, or force consumers into automated customer services processes that do not solve the problem.

Currently, customers bear the financial risk of failures that they did not cause. AB 578 ensures that consumers are provided with a refund in their original payment method, not just a credit to be used at a later time for a service they may no longer wish to use. AB 578 further ensures customers have access to a live customer service representative to address any issue with the order, not an inescapable chatbot labyrinth.

Consumers deserve the same protections when ordering food online that they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. AB 578 provides a simple but crucial safeguard in an increasingly digital marketplace.

Technet and the California Chamber of Commerce write in opposition:

AB 578 fails to contemplate potential fraud by the recipient of the food. As an example: proposed subsection 22599.2(d) provides that “in the event that a customer receives a partial order, the food delivery platform shall … charge the customer only for the amount delivered … [and] provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.” (emphasis added.) In other words, AB 578 appears to not consider (and therefore not allow platforms to account for) situations where a recipient of a meal may falsely assert that their food was improperly delivered – for example, claiming that items were missing inside of their delivery bag. In the face of this claim, food delivery platforms must have the ability to question the veracity of such claims, particularly in the light of repeated claims of failure to deliver from one customer. However, it is unclear how they could do so under AB 578’s strong refund language. We would ask for amendments to clarify that AB 578 is not intended to prohibit fraud prevention efforts in those rare cases where they are necessary.

In order to respond to concerns of fraud, the author has agreed to an amendment that ensures platforms can remove a user they have a reasonable suspicion has engaged in fraud.

The California Federation of Labor Unions writes in support:

AB 578 also prohibits the food delivery platform from a payment model that uses any gratuity to offset the base pay to the person delivering the order. It makes clear that drivers are entitled to all tips and gratuities even if the company issues a full refund to the customer.

Consumers and drivers deserve the same protection when ordering food online as they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. Drivers also deserve the labor protections that cover restaurants and all other workers to ensure they are paid the tips they earned even after a refund.

Writing in opposition, Grubhub outlines its concerns:

Our concerns:

• Section 2 of AB 578 is unclear about what could trigger a full or partial refund to the consumer, which could lead to rampant fraud and abuse. The current language would require food delivery platforms to refund the full amount of the gratuity to the consumer in the event of a wrong or incomplete order, without deducting the amount from the courier. The current language fails to provide a food delivery platform with clear terms for investigating claims, exposing the food delivery platform and our restaurant partners to fraud and financial harm.
• Section 2 of AB 578 does not distinguish between delivery by a food delivery service and restaurants that choose to use a delivery platform for marketing but deliver using internal resources. In instances of an incorrect order, Grubhub has the ability to refund the diner for the incorrect food items, but it has no ability to control whether or not the delivery driver's gratuity is deducted from earnings. We would ask that "delivery driver" be amended to narrowly define delivery to experiences using a third-party courier.
• Section 2 AB 578 does not appear to define what constitutes a “wrong order,” and it is not clear how or when this would differ from a “partial order.” Is an order wrong if a diner ordering a burger requests no pickles but receives pickles? How can this be verified? Is it reasonable to expect a restaurant to provide a full refund in this scenario, particularly if the remainder of the order was complete and correct? We would ask that “wrong order” be defined or that BA 578 be limited to incomplete orders.

Uber Technologies writes in support:

Uber Technologies, Inc. writes in support of AB 578, which would establish minimum customer service standards for food delivery platforms such as those operated by Uber Eats.

Among these standards are providing access to a live person, and off ering a full or partial refund when an order isn’t received or is incorrect. In addition, the bill provides for a mechanism for a customer to request a refund to their original method of payment - all customer service standards that Uber proudly meets. We also appreciate your recent amendment that recognizes the importance of ensuring delivery drivers keep tips that have already been paid out to them.

Uber strives to provide excellent customer service to its customers everyday. We believe this bill is a common sense measure to ensure all customers are provided excellent service.

SUPPORT

California Federation of Labor Unions, AFL-CIO

California Low-Income Consumer Coalition

Uber Technologies, INC.

UFCW - Western States Council

OPPOSITION

California Chamber of Commerce

Grubhub

TechNet

Chamber of Progress

RELATED LEGISLATION

Pending Legislation: None known.

Prior Legislation:

SB 1490 (Durazo, Ch.898, Stats. 2024) See Comment 2.

AB 502 (Lee, Ch. 164, Stats. 2023) See Comment 2.

AB 286 (Gonzalez, Ch. 513, Stats. 2021) See Comment 2.

AB 2149 (Gonzalez, Ch. 125, Stats. 2020) See Executive Summary.

AB 3336 (Carrillo, Ch. 105, Stats. 2020) required ready-to-eat food delivered by third-party food delivery services to be transported in a manner that protects the food from contamination and spoilage, including by requiring the interior floor, sides, and top of the food holding area to be clean, requiring the food to be maintained at a holding temperature necessary to prevent spoilage, and by requiring bags or containers to be closed with a tamper-evident method prior to the food deliverer taking possession of the ready-to-eat food.

AB 1360 (Ting, 2019) would have established requirements on food delivery platforms that deliver food to consumers from a grocery establishment, a retail store with a grocery department, or a grocery warehouse, including requiring that a food delivery driver has specified training, and that the food delivery platform maintains liability insurance. The bill died on the Senate floor.

PRIOR VOTES:

Assembly Floor (Ayes 63, Noes 2)

Assembly Privacy and Consumer Protection Committee (Ayes 14, Noes 0)

**************

1. All further section references are to the Business and Professions Code unless otherwise indicated. ↑

2. National Restaurant Association, Letter to Congress (Apr. 20, 2020), see https://www.cnbc.com/2020/04/20/coronavirus-restaurants-describe-huge-shortfalls-with-government-aid.html; Matt Goulding, An Extinction Event for America’s Restaurants (June 19, 2020) The Atlantic, available at https://www.theatlantic.com/culture/archive/2020/06/what-will-happen-restaurants/613141/. All internet citations are current as of June 9, 2025. ↑

3. Chris Crowley, 5 Big Reasons the Delivery ‘Boom’ May Soon Go Bust (May 5, 2021) New York Magazine, available at https://www.grubstreet.com/2021/05/5-reasons-the-food-delivery-boom-may-soon-go-bust.html. ↑

4. For the top five food delivery platforms, total markups range from 17 percent to 40.5 percent of the restaurant’s list price. (Noah Lichtenstein, The hidden cost of food delivery, (Mar. 16, 2020) TechCrunch, available at https://techcrunch.com/2020/03/16/the-hidden-cost-of-food-delivery/.) ↑

5. Many restaurants use their own online ordering and delivery systems to ensure quality control and cost-effectiveness. Boutique restaurants may lack the capacity to absorb extra orders and may be unwilling to risk entrusting an unknown, unregulated third party to handle an order properly and deliver it promptly. ↑

6. See Jaya Saxena Who’s Paying for the Great Delivery Wars? (Jan. 21, 2021) Eater.com, available at https://www.eater.com/22224695/uber-eats-postmates-grubhub-delivery-wars-2021. ↑

7. Janelle Bitker & Shwanika Narayan, Grubhub, DoorDash rush to add restaurants. Customers and drivers pay the price (Feb. 2, 2020) San Francisco Chronicle, available at https://www.sfchronicle.com/business/article/Grubhub-DoorDash-rush-to-add-restaurants-15023372.php. ↑

8. Business and Professions Code section 17200 prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. The UCL covers a wide range of conduct, making any business practice prohibited by law independently actionable as an unfair competitive practice. (Medical Marijuana, Inc. v. ProjectCBD.com (2020) 46 Cal.App.5th 869, 896, citing Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143.) However, “a practice may violate the UCL even if it is not prohibited by another statute. Unfair and fraudulent practices are alternate grounds for relief.” (Medical Marijuana, Inc. v. ProjectCBD.com, supra, 46 Cal.App.5th at 896, quoting Zhang v. Superior Court (2013) 57 Cal.4th 364, 370 [citations and nested quotation marks omitted].) ↑

9. LA County Sues Grubhub Alleging Unfair and Deceptive Business Practices, Office of the County Counsel, Los Angeles, https://counsel.lacounty.gov/la-county-sues-grubhub-alleging-unfair-and-deceptive-business-practices/. ↑

10. Case Summary, Grubhub Inc., FTC and Illinois v. (December 31, 2024) FTC, https://www.ftc.gov/legal-library/browse/cases-proceedings/202-3157-grubhub-inc-ftc-illinois-v. ↑

11. Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips (February 24, 2025) Office of the New York State Attorney General, https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers. ↑

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2025-2026 Regular Session

Bill No: AB 578 (Author:Bauer-Kahan)

Version: June 12, 2025

Hearing Date: June 24, 2025

Fiscal: No

Urgency: No

Consultant: CK

SUBJECT

Food delivery platforms: customer service

DIGEST

This bill strengthens the Fair Food Delivery Act. It provides protections and transparency for delivery people’s compensation and establishes refund protections for consumers. This bill also requires food delivery platforms to provide for customer service features that allow access to a natural person, as provided.

EXECUTIVE SUMMARY

While third party app-based food delivery companies, such as DoorDash, Uber Eats, and Grubhub, offer the promise of convenient and safe access to a variety of restaurants at the click of a button, these companies’ success has presented a number of issues for restaurants, customers, and delivery workers. To protect restaurants and customers, the Legislature enacted the Fair Food Delivery Act of 2020 (AB 2149 (Gonzalez, Ch. 125, Stats. 2020)) (Act), which prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. Several measures have since bolstered the Act.

This bill seeks to build on the protections of the Act for both customers and delivery workers. It prohibits offsetting the base pay of a delivery person based on gratuities or tips and requires food delivery platforms to disclose to a delivery worker an itemized breakdown of their pay. The bill also addresses situations where a customer’s accurate order is not fully delivered, imposing requirements on platforms to provide refunds, as specified. Platforms must also provide access to a customer service representative that is a natural person, as provided. The bill is author-sponsored and supported by the California Federation of Labor Unions and Uber. It is opposed by various business and tech organizations, including Technet. If the bill passes this Committee, it will next be heard in the Senate Committee on Business, Professions, and Economic Development.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the Act, which prohibits food delivery platforms, as defined, from arranging for the delivery of an order from a food facility, as defined, without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (Bus. & Prof Code § 22598 et seq.)^[1]
2. Defines the relevant terms, including:
   1. “Food delivery platform” means an online business that acts as an intermediary between consumers and multiple food facilities to submit food and beverage orders from a consumer to a participating food facility and to arrange for, or to complete, the delivery of the order from the food facility to the consumer.
   2. “Online order” means an order for food or beverage placed by a customer through or with the assistance of a food delivery platform, including, but not limited to, a telephone order, for delivery. (§ 22598.)
3. Makes it unlawful for a food delivery platform to do the following:
   1. Charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platform’s internet website by the food facility at the time of the order.
   2. Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity for a delivery order shall be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage. Any tip or gratuity for a pickup order shall be paid by a food delivery platform, in its entirety, to the food facility. (§ 22599.1(a).)
4. Requires a food delivery platform to prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including all of the following information:
   1. The purchase price of the food and beverage.
   2. A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.
   3. Each fee, commission, and any other cost charged to the customer by the food delivery platform; and
   4. Any tip or gratuity payable to the delivery driver or food facility. (§ 22599.1(b).)
5. Requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including all of the following:
   1. The method of delivery.
   2. The anticipated date and time of the delivery of the order.
   3. Confirmation that the order has been successfully delivered or that the delivery cannot be completed. (§ 22599.1(d).)

This bill:

1. Makes it unlawful for a food delivery platform to maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.
2. Requires a food delivery platform to do the following:
   1. Prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.
   2. Include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The food delivery platform may use an automated system to address customer service concerns. However, if the automated system is unable to address the customer’s concerns, the food delivery platform shall ensure that the customer is able to promptly connect with the natural person in order to address the concern.
   3. Provide a full refund, including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered. It shall refund the amount of the original paid gratuity to the customer but shall not take or deduct the original gratuity amount from the delivery driver.
3. Provides that if it is not feasible for the food delivery platform to refund the paid gratuity to the customer in the original method of payment, the platform shall provide an alternate refund method for the paid gratuity.
4. Requires a platform, if a customer receives a partial order, to do the following:
   1. Charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order.
   2. Provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
5. Along with any other refund options, the food delivery platform shall provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.

COMMENTS

1. Food delivery platforms and the Fair Food Delivery Act of 2020

The COVID-19 pandemic decimated the restaurant industry. Millions of employees were laid off or furloughed and approximately four in 10 restaurants closed.^[2] Meanwhile, sales through third-party online delivery services, already a major growth industry before the pandemic, surged dramatically, growing by 122 percent in 2020.^[3] Although these services can conveniently and safely connect restaurants with customers, they can be costly—commissions are often around 30 percent of the sale price, and there may be additional fees^[4]—and a poor fit for some restaurants.^[5] In an industry known for thin profit margins, this impact to revenues can be a formidable barrier to sustained financial viability.

Several lawsuits against food delivery platforms have been filed across the country alleging, among other unscrupulous behaviors, unfair business practices, labor violations, and the misuse of restaurants’ names and logos.^[6] One type of predatory practice involved listing restaurants on food delivery websites without their consent,^[7] which risks overwhelming restaurant operations, creating quality and safety problems, and eroding customer bases.

In response, the Legislature adopted the Fair Food Delivery Act of 2020. The Act prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (§ 22599.) A violation of the Act constitutes an unfair business practice under the Unfair Competition Law.^[8] A number of updates have occurred in the years since.

AB 286 (Gonzalez, Ch. 513, Stats. 2021) expanded the Act by prohibiting a food delivery platform from marking up the price of the food and beverages it delivers or retaining tips or gratuities it receives. AB 286 also requires food delivery platforms to provide itemized cost breakdowns to customers and food facilities that includes the purchase price of the food and beverage; a notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, except as specified; each fee, commission, or cost charged to the customer by the food delivery platform; and any tip or gratuity.

AB 502 (Lee, Ch. 164, Stats. 2023) addressed issues with consumer communications intended for food facilities that are placed through a listing website. It prohibits such websites from associating methods of communication with a food facility where they know that use of that method will result in a “forwarded call,” as defined. AB 502 also requires certain disclosures with respect to fees, commissions, and other costs in connection with orders placed through such websites.

Just last year, SB 1490 (Durazo, Ch. 898, Stats. 2024) bolstered the protections of the Act by requiring platforms to disclose to consumers and restaurants the status of deliveries and to inform the food facilities of specified details, including information about how errors are handled and charged and the various fees and features involved with a platform’s various plans. It also requires platforms to provide facilities a mechanism for removing themselves and for directing the platform to disclose to consumers the delivery fee charged to the facility.

1. Strengthening the protections of the Fair Food Delivery Act

Despite these laws, concerns within the industry regarding anti-competitive practices, and opaque and manipulative fees continue to be expressed and litigated. Los Angeles County brought an enforcement action against a leading food delivery platform, Grubhub, alleging false and deceptive advertising, misrepresentation and unfair business practices that financially harm consumers, delivery drivers, and restaurants.^[9]

The Federal Trade Commission also recently took action against Grubhub, reaching a settlement based on allegations of unlawful practices:

Grubhub will pay $25 million to settle charges from the Federal Trade Commission and the Illinois Attorney General that the food delivery firm engaged in an array of unlawful practices including deceiving diners about delivery costs and blocking their access to their accounts and funds, deceiving workers about how much money they would make delivering food, and unfairly and deceptively listing restaurants on its platform without their permission.

Under the proposed settlement, the company must make substantial changes to its operations across a number of areas, including telling consumers the full cost of delivery, honestly advertising pay for drivers, and listing restaurants on its platform only with their consent.^[10]

Earlier this year, the New York Attorney General announced the conclusion of its own action against another platform, DoorDash:

New York Attorney General Letitia James today announced a $16.75 million settlement with delivery platform DoorDash for misleading both consumers and delivery workers (known as “Dashers”) by using tips intended for Dashers to subsidize their guaranteed pay. Between May 2017 and September 2019, DoorDash used a guaranteed pay model that let Dashers see how much they would be paid before accepting a delivery. An Office of the Attorney General (OAG) investigation found that under this model, DoorDash used customer tips to offset the base pay it had already guaranteed to workers, instead of giving workers the full tips they rightfully earned. DoorDash will pay $16.75 million in restitution for Dashers and up to $1 million in settlement administrator costs to help issue the payments.^[11]

This bill bolsters the protections of the Act in order to address some of these lingering issues in the industry.

First, the bill directly addresses the focus of the New York settlement by prohibiting food delivery platforms from maintaining a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage. To ensure more transparency for these delivery workers, the bill requires food delivery platforms to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery, including the base pay, gratuity or tips, and any promotional bonuses.

Second, the bill provides stronger protections for consumers when their orders are not delivered or the wrong order is delivered. It requires platforms to provide a full refund, including all taxes, commissions, fees, and gratuities, as specified, to the customer if an order is not delivered or the wrong order is delivered. Along with any other refund options, the food delivery platform must provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment. If the consumer receives a partial order, the platform may only charge a prorated amount and the consumer must be able to adjust the gratuity included prior to the incomplete delivery.

Finally, to ensure consumers are able to voice issues and report incidents effectively, the bill requires food delivery platforms to provide a feature that allows a customer to contact a natural person, allowing for the platforms to utilize an automated system to first attempt to triage the issue.

According to the author:

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

1. Stakeholder positions

The California Low-Income Consumer Coalition writes in support:

As food delivery has become a frequent part of daily life, consumers have grown increasingly reliant on third-party delivery platforms. Unfortunately, with that increase has come a growing number of concerns regarding business practices and an increase in complaints: missing items, incorrect orders, or undelivered meals. Some platforms offer only partial credits, refuse to issue refunds, or force consumers into automated customer services processes that do not solve the problem.

Currently, customers bear the financial risk of failures that they did not cause. AB 578 ensures that consumers are provided with a refund in their original payment method, not just a credit to be used at a later time for a service they may no longer wish to use. AB 578 further ensures customers have access to a live customer service representative to address any issue with the order, not an inescapable chatbot labyrinth.

Consumers deserve the same protections when ordering food online that they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. AB 578 provides a simple but crucial safeguard in an increasingly digital marketplace.

Technet and the California Chamber of Commerce write in opposition:

AB 578 fails to contemplate potential fraud by the recipient of the food. As an example: proposed subsection 22599.2(d) provides that “in the event that a customer receives a partial order, the food delivery platform shall … charge the customer only for the amount delivered … [and] provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.” (emphasis added.) In other words, AB 578 appears to not consider (and therefore not allow platforms to account for) situations where a recipient of a meal may falsely assert that their food was improperly delivered – for example, claiming that items were missing inside of their delivery bag. In the face of this claim, food delivery platforms must have the ability to question the veracity of such claims, particularly in the light of repeated claims of failure to deliver from one customer. However, it is unclear how they could do so under AB 578’s strong refund language. We would ask for amendments to clarify that AB 578 is not intended to prohibit fraud prevention efforts in those rare cases where they are necessary.

In order to respond to concerns of fraud, the author has agreed to an amendment that ensures platforms can remove a user they have a reasonable suspicion has engaged in fraud.

The California Federation of Labor Unions writes in support:

AB 578 also prohibits the food delivery platform from a payment model that uses any gratuity to offset the base pay to the person delivering the order. It makes clear that drivers are entitled to all tips and gratuities even if the company issues a full refund to the customer.

Consumers and drivers deserve the same protection when ordering food online as they would expect in a brick-and-mortar restaurant; if the meal is not delivered, they should not be charged. Drivers also deserve the labor protections that cover restaurants and all other workers to ensure they are paid the tips they earned even after a refund.

Writing in opposition, Grubhub outlines its concerns:

Our concerns:

• Section 2 of AB 578 is unclear about what could trigger a full or partial refund to the consumer, which could lead to rampant fraud and abuse. The current language would require food delivery platforms to refund the full amount of the gratuity to the consumer in the event of a wrong or incomplete order, without deducting the amount from the courier. The current language fails to provide a food delivery platform with clear terms for investigating claims, exposing the food delivery platform and our restaurant partners to fraud and financial harm.
• Section 2 of AB 578 does not distinguish between delivery by a food delivery service and restaurants that choose to use a delivery platform for marketing but deliver using internal resources. In instances of an incorrect order, Grubhub has the ability to refund the diner for the incorrect food items, but it has no ability to control whether or not the delivery driver's gratuity is deducted from earnings. We would ask that "delivery driver" be amended to narrowly define delivery to experiences using a third-party courier.
• Section 2 AB 578 does not appear to define what constitutes a “wrong order,” and it is not clear how or when this would differ from a “partial order.” Is an order wrong if a diner ordering a burger requests no pickles but receives pickles? How can this be verified? Is it reasonable to expect a restaurant to provide a full refund in this scenario, particularly if the remainder of the order was complete and correct? We would ask that “wrong order” be defined or that BA 578 be limited to incomplete orders.

Uber Technologies writes in support:

Uber Technologies, Inc. writes in support of AB 578, which would establish minimum customer service standards for food delivery platforms such as those operated by Uber Eats.

Among these standards are providing access to a live person, and off ering a full or partial refund when an order isn’t received or is incorrect. In addition, the bill provides for a mechanism for a customer to request a refund to their original method of payment - all customer service standards that Uber proudly meets. We also appreciate your recent amendment that recognizes the importance of ensuring delivery drivers keep tips that have already been paid out to them.

Uber strives to provide excellent customer service to its customers everyday. We believe this bill is a common sense measure to ensure all customers are provided excellent service.

SUPPORT

California Federation of Labor Unions, AFL-CIO

California Low-Income Consumer Coalition

Uber Technologies, INC.

UFCW - Western States Council

OPPOSITION

California Chamber of Commerce

Grubhub

TechNet

Chamber of Progress

RELATED LEGISLATION

Pending Legislation: None known.

Prior Legislation:

SB 1490 (Durazo, Ch.898, Stats. 2024) See Comment 2.

AB 502 (Lee, Ch. 164, Stats. 2023) See Comment 2.

AB 286 (Gonzalez, Ch. 513, Stats. 2021) See Comment 2.

AB 2149 (Gonzalez, Ch. 125, Stats. 2020) See Executive Summary.

AB 3336 (Carrillo, Ch. 105, Stats. 2020) required ready-to-eat food delivered by third-party food delivery services to be transported in a manner that protects the food from contamination and spoilage, including by requiring the interior floor, sides, and top of the food holding area to be clean, requiring the food to be maintained at a holding temperature necessary to prevent spoilage, and by requiring bags or containers to be closed with a tamper-evident method prior to the food deliverer taking possession of the ready-to-eat food.

AB 1360 (Ting, 2019) would have established requirements on food delivery platforms that deliver food to consumers from a grocery establishment, a retail store with a grocery department, or a grocery warehouse, including requiring that a food delivery driver has specified training, and that the food delivery platform maintains liability insurance. The bill died on the Senate floor.

PRIOR VOTES:

Assembly Floor (Ayes 63, Noes 2)

Assembly Privacy and Consumer Protection Committee (Ayes 14, Noes 0)

**************

1. All further section references are to the Business and Professions Code unless otherwise indicated. ↑

2. National Restaurant Association, Letter to Congress (Apr. 20, 2020), see https://www.cnbc.com/2020/04/20/coronavirus-restaurants-describe-huge-shortfalls-with-government-aid.html; Matt Goulding, An Extinction Event for America’s Restaurants (June 19, 2020) The Atlantic, available at https://www.theatlantic.com/culture/archive/2020/06/what-will-happen-restaurants/613141/. All internet citations are current as of June 9, 2025. ↑

3. Chris Crowley, 5 Big Reasons the Delivery ‘Boom’ May Soon Go Bust (May 5, 2021) New York Magazine, available at https://www.grubstreet.com/2021/05/5-reasons-the-food-delivery-boom-may-soon-go-bust.html. ↑

4. For the top five food delivery platforms, total markups range from 17 percent to 40.5 percent of the restaurant’s list price. (Noah Lichtenstein, The hidden cost of food delivery, (Mar. 16, 2020) TechCrunch, available at https://techcrunch.com/2020/03/16/the-hidden-cost-of-food-delivery/.) ↑

5. Many restaurants use their own online ordering and delivery systems to ensure quality control and cost-effectiveness. Boutique restaurants may lack the capacity to absorb extra orders and may be unwilling to risk entrusting an unknown, unregulated third party to handle an order properly and deliver it promptly. ↑

6. See Jaya Saxena Who’s Paying for the Great Delivery Wars? (Jan. 21, 2021) Eater.com, available at https://www.eater.com/22224695/uber-eats-postmates-grubhub-delivery-wars-2021. ↑

7. Janelle Bitker & Shwanika Narayan, Grubhub, DoorDash rush to add restaurants. Customers and drivers pay the price (Feb. 2, 2020) San Francisco Chronicle, available at https://www.sfchronicle.com/business/article/Grubhub-DoorDash-rush-to-add-restaurants-15023372.php. ↑

8. Business and Professions Code section 17200 prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. The UCL covers a wide range of conduct, making any business practice prohibited by law independently actionable as an unfair competitive practice. (Medical Marijuana, Inc. v. ProjectCBD.com (2020) 46 Cal.App.5th 869, 896, citing Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143.) However, “a practice may violate the UCL even if it is not prohibited by another statute. Unfair and fraudulent practices are alternate grounds for relief.” (Medical Marijuana, Inc. v. ProjectCBD.com, supra, 46 Cal.App.5th at 896, quoting Zhang v. Superior Court (2013) 57 Cal.4th 364, 370 [citations and nested quotation marks omitted].) ↑

9. LA County Sues Grubhub Alleging Unfair and Deceptive Business Practices, Office of the County Counsel, Los Angeles, https://counsel.lacounty.gov/la-county-sues-grubhub-alleging-unfair-and-deceptive-business-practices/. ↑

10. Case Summary, Grubhub Inc., FTC and Illinois v. (December 31, 2024) FTC, https://www.ftc.gov/legal-library/browse/cases-proceedings/202-3157-grubhub-inc-ftc-illinois-v. ↑

11. Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips (February 24, 2025) Office of the New York State Attorney General, https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 578

Author:(Bauer-Kahan)

As Amended Ver:May 12, 2025

Majority vote

SUMMARY

Food delivery platforms must implement a refund mechanism to address issues such as missed, partially delivered, or incorrect orders. They must also provide a clear way for consumers to contact a live customer service representative. Additionally, platforms are required to uphold fair payment practices for delivery personnel and ensure greater transparency regarding their earnings.

Major Provisions

1. Prohibits a food delivery platform from maintaining a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.
2. Requires the food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery including, but not limited to, the base pay, gratuity or tips, and any promotional bonuses.
3. Requires that a food delivery platform have a clear and conspicuous way for customers to contact a natural person when interacting with customer service. This provision does not prohibit the use of automated systems to address customers concerns.
4. Requires that food delivery platforms provide a full refund including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered.
5. In the event of a partially delivered order, requires that food delivery platforms charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order.
6. Requires the food delivery platform to refund the amount of the original paid gratuity to the customer but shall not take or deduct the original gratuity amount from the delivery driver.
7. Permits the food delivery platform to provide an alternate refund method for the paid gratuity in the event that it is not feasible for the food delivery platform to refund the paid gratuity to the customer in the original method of payment.
8. In the event of a partially delivered order, requires food delivery platforms to provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
9. Requires that food delivery platforms provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.

COMMENTS

Unclear refund policies. Grubhub, DoorDash, and Uber Eats dominate the food delivery market, yet none of these platforms have a clear refund policy. All three state that sales are final, and refunds are issued at their discretion, with no obligation to provide reimbursement.^[1],[2],[3] Last year, a Rocklin resident was unable to receive a refund from DoorDash for virtual reality goggles he ordered through the platform because of their ″no obligation to issue a refund″.^[4] Although the retailer refunded DoorDash for the purchase, the platform failed to pass the refund on to the customer until after the case received public attention.

These unclear refund policies become increasingly complicated for deliveries that are either wrong or incomplete. Consumers typically pay tips, service charges, and other fees upfront, assuming their orders will be fulfilled correctly. If an order is incomplete, the consumer may receive a refund for the missing items, but may not be reimbursed for associated tips and fees. For example, consider an order for ten pizzas totaling $200 and the consumer pays an additional $100 for the fees and tip. If only one of those pizzas is delivered, then the consumer would likely be refunded for the $180 of pizza that was not delivered, but it is unclear with current policies in place if the consumer can be refunded any amount of the $100 used for the tip and fees paid corresponding to the original $200 order, not the $20 order that was actually delivered.

This is further compounded by the increasing reliance on chatbots to assist with customer service. Many consumers find these automated systems frustrating, particularly when dealing with complex refund request. Reports from last year showed that 45% of American consumers had an unfavorable feeling toward the use of chatbots for customer service while only 19% were favorable.^[5] Chatbots can become increasingly difficult to work with if they are trained to respond in ways that align with the platform′s policies, especially if the policies, such as those for refunds, are unclear. This is likely why about 60% of people prefer live chats with human customer service agents over a chatbot.^[6]

Unfair payment practices. The scope of the bill was expanded to address unfair wage practices. The Attorneys General for both Illinois and New York have reached settlements with DoorDash regarding their use of tips to offset guaranteed pay.^[7] The New York AG′s investigation found that DoorDash was using a deceptive pay model whereby delivery drivers were only able to see their tips if the tip was greater than the payment amount DoorDash guaranteed. For example, if a driver was guaranteed $10 and the customer tipped $4, the driver would be paid $10 with the customer contributing $4 and DoorDash contributing $6. These cases resulted in a $16.25 million settlement in NY and a $11.25 million settlement in Illinois.^[8],[9] These types of practices may exist in California because the law currently only prohibits the retaining of any tip or gratuity, and as the gratuity is not retained by DoorDash, it may not violate the law, but arguably it violates the Legislature′s intent.

This bill was amended on the Floor to prohibit food delivery platforms from deducting or taking gratuity paid to the delivery driver to refund customers for missed or incorrectly delivered orders. These changes align this bill with Section 351 of the Labor Code. The amendments also permit food delivery platforms to refund paid gratuity to customers in the form of an alternative refund method, such as credit on the platform, in the event that it is infeasible to refund the gratuity to the original method of payment.

Please see the policy committee analysis for a full discussion of this bill.

According to the Author

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

Arguments in Support

None on file.

Arguments in Opposition

In opposition to the bill, California Chamber of Commerce and TechNet, argues:

At a functional level, we have concerns that some of these provisions are unworkable. For example, some of the fees associated with delivery are not percentage-based and thus cannot be ″pro-rated″ ... notably there may be a flat fee to delivery orders below a certain total value. We also have concerns with the bill′s focus on refunding or altering gratuities. The gratuity for an order is customarily already provided to the delivery person by the time a refund or complaint is made – meaning that unpacking that transaction and re-claiming a gratuity may not be feasible for the delivery platform. As a result, though we are sensitive to the author′s intention regarding clear and efficient refund policies, we have some concerns with the present language that we are continuing to discuss with member companies.

In addition, due to the early nature of this hearing (and related letter deadline) we are continuing to gather feedback regarding the proposed Business & Professions Code Section 22599.1 related to customer service and will engage with your office as concerns arise. We believe concerns may arise related to how the bill′s requirement of ″promptly connect[ing]″ to customer service may be operationalized, as well as how to include a ″clear and conspicuous customer service″ allowing customers to reach a ″natural person″ on the limited screen space of a mobile app. However, at this time, we are still awaiting more feedback from members on these issues.

For these reasons and others, we must OPPOSE AB 578.

FISCAL COMMENTS

No fiscal impact.

VOTES

ASM PRIVACY AND CONSUMER PROTECTION: 14-0-1

YES: Bauer-Kahan, Dixon, Bryan, DeMaio, Ellis, Irwin, Lowenthal, McKinnor, Ortega, Pellerin, Petrie-Norris, Ward, Wicks, Wilson

ABS, ABST OR NV: Patterson

UPDATED

VERSION: May 12, 2025

CONSULTANT: John Bennett / P. & C.P. / (916) 319-2200 FN: 0000399

1. DoorDash, ″Consumer Terms and Conditions,″ https://help.doordash.com/legal/document?type=cx-terms-and-conditions&region=US&locale=en-US, Accessed on Mar. 10, 2025. ↑

2. Uber, ″U.S. Terms of Use,″ https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=united-states&lang=en, Accessed on Mar. 10, 2025. ↑

3. Grubhub, ″Terms of Use,″ https://www.grubhub.com/legal/terms-of-use, Accessed on Mar. 10, 2025 ↑

4. Kurtis Ming and Kevin Wing, ″DoorDash now delivers electronics; viewer got stiffed on $500 refund″, CBS News (July 1, 2024) , https://www.cbsnews.com/sacramento/news/doordash-now-delivers-electronics-viewer-got-stiffed-on-500-refund-call-kurtis-investigates/ ↑

5. Jason Collins, ″Customer Service Chatbots Earn Mixed Reviews as People Still Prefer Human Conversations,″ Civic Science (July 24. 2024), https://civicscience.com/customer-service-chatbots-earn-mixed-reviews-as-people-still-prefer-human-conversations/#:~:text=Customer%20Service%20Satisfaction%20Across%20the%20Board%20Is%20Mixed&text=CivicScience%20learned%20that%2C%20in%20general,those%20who%20were%20not%20satisfied. ↑

6. Danielle Commisso, ″Do Chatbots Live Up to the Hype? Consumers Weigh In,″, Civic Science (Apr. 28, 2022). https://civicscience.com/do-chatbots-live-up-to-the-hype-consumers-weigh-in/ ↑

7. New York State Attorney General, ″Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips,″ https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers Accessed on Mar. 10, 2025. ↑

8. Ibid. ↑

9. Office of the Illinois Attorney General, ″ATTORNEY GENERAL RAOUL ANNOUNCES $11.25 MILLION SETTLEMENT AGREEMENT WITH DOORDASH OVER DELIVERY DRIVER TIPS,″ https://illinoisattorneygeneral.gov/news/story/attorney-general-raoul-announces-1125-million-settlement-agreement-with-doordash-over-delivery-driver-tips Accessed on Mar. 10, 2025. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 578

Author:(Bauer-Kahan)

As Amended Ver:March 20, 2025

Majority vote

SUMMARY

Food delivery platforms must implement a refund mechanism to address issues such as missed, partially delivered, or incorrect orders. They must also provide a clear way for consumers to contact a live customer service representative. Additionally, platforms are required to uphold fair payment practices for delivery personnel and ensure greater transparency regarding their earnings.

Major Provisions

1. Prohibits a food delivery platform from maintaining a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.
2. Requires the food delivery platform to prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery including, but not limited to, the base pay, gratuity or tips, and any promotional bonuses.
3. Requires that a food delivery platform have a clear and conspicuous way for customers to contact a natural person when interacting with customer service. This provision does not prohibit the use of automated systems to address customers concerns.
4. Requires that food delivery platforms provide a full refund including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered.
5. In the event of a partially delivered order, requires that food delivery platforms charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order.
6. In the event of a partially delivered order, requires food delivery platforms to provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
7. Requires that food delivery platforms provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.

COMMENTS

Unclear refund policies. Grubhub, DoorDash, and Uber Eats dominate the food delivery market, yet none of these platforms have a clear refund policy. All three state that sales are final, and refunds are issued at their discretion, with no obligation to provide reimbursement.^[1],[2],[3] Last year, a Rocklin resident was unable to receive a refund from DoorDash for virtual reality goggles he ordered through the platform because of their "no obligation to issue a refund".^[4] Although the retailer refunded DoorDash for the purchase, the platform failed to pass the refund on to the customer until after the case received public attention.

These unclear refund policies become increasingly complicated for deliveries that are either wrong or incomplete. Consumers typically pay tips, service charges, and other fees upfront, assuming their orders will be fulfilled correctly. If an order is incomplete, the consumer may receive a refund for the missing items, but may not be reimbursed for associated tips and fees. For example, consider an order for ten pizzas totaling $200 and the consumer pays an additional $100 for the fees and tip. If only one of those pizzas is delivered, then the consumer would likely be refunded for the $180 of pizza that was not delivered, but it is unclear with current policies in place if the consumer can be refunded any amount of the $100 used for the tip and fees paid corresponding to the original $200 order, not the $20 order that was actually delivered.

This is further compounded by the increasing reliance on chatbots to assist with customer service. Many consumers find these automated systems frustrating, particularly when dealing with complex refund request. Reports from last year showed that 45% of American consumers had an unfavorable feeling toward the use of chatbots for customer service while only 19% were favorable.^[5] Chatbots can become increasingly difficult to work with if they are trained to respond in ways that align with the platform's policies, especially if the policies, such as those for refunds, are unclear. This is likely why about 60% of people prefer live chats with human customer service agents over a chatbot.^[6]

Unfair payment practices. The scope of the bill was expanded to address unfair wage practices. The Attorneys General for both Illinois and New York have reached settlements with DoorDash regarding their use of tips to offset guaranteed pay.^[7] The New York AG's investigation found that DoorDash was using a deceptive pay model whereby delivery drivers were only able to see their tips if the tip was greater than the payment amount DoorDash guaranteed. For example, if a driver was guaranteed $10 and the customer tipped $4, the driver would be paid $10 with the customer contributing $4 and DoorDash contributing $6. These cases resulted in a $16.25 million settlement in NY and a $11.25 million settlement in Illinois.^[8],[9] These types of practices may exist in California because the law currently only prohibits the retaining of any tip or gratuity, and as the gratuity is not retained by DoorDash, it may not violate the law, but arguably it violates the Legislature's intent.

Please see the policy committee analysis for a full discussion of this bill.

According to the Author

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

Arguments in Support

None on file.

Arguments in Opposition

In opposition to the bill, California Chamber of Commerce and TechNet, argues:

At a functional level, we have concerns that some of these provisions are unworkable. For example, some of the fees associated with delivery are not percentage-based and thus cannot be "pro-rated" ... notably there may be a flat fee to delivery orders below a certain total value. We also have concerns with the bill's focus on refunding or altering gratuities. The gratuity for an order is customarily already provided to the delivery person by the time a refund or complaint is made – meaning that unpacking that transaction and re-claiming a gratuity may not be feasible for the delivery platform. As a result, though we are sensitive to the author's intention regarding clear and efficient refund policies, we have some concerns with the present language that we are continuing to discuss with member companies.

In addition, due to the early nature of this hearing (and related letter deadline) we are continuing to gather feedback regarding the proposed Business & Professions Code Section 22599.1 related to customer service and will engage with your office as concerns arise. We believe concerns may arise related to how the bill's requirement of "promptly connect[ing]" to customer service may be operationalized, as well as how to include a "clear and conspicuous customer service" allowing customers to reach a "natural person" on the limited screen space of a mobile app. However, at this time, we are still awaiting more feedback from members on these issues.

For these reasons and others, we must OPPOSE AB 578.

FISCAL COMMENTS

No fiscal impact.

VOTES

ASM PRIVACY AND CONSUMER PROTECTION: 14-0-1

YES: Bauer-Kahan, Dixon, Bryan, DeMaio, Ellis, Irwin, Lowenthal, McKinnor, Ortega, Pellerin, Petrie-Norris, Ward, Wicks, Wilson

ABS, ABST OR NV: Patterson

UPDATED

VERSION: March 20, 2025

CONSULTANT: John Bennett / P. & C.P. / (916) 319-2200 FN: 0000175

1. DoorDash, "Consumer Terms and Conditions," https://help.doordash.com/legal/document?type=cx-terms-and-conditions&region=US&locale=en-US, Accessed on Mar. 10, 2025. ↑

2. Uber, "U.S. Terms of Use," https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=united-states&lang=en, Accessed on Mar. 10, 2025. ↑

3. Grubhub, "Terms of Use," https://www.grubhub.com/legal/terms-of-use, Accessed on Mar. 10, 2025 ↑

4. Kurtis Ming and Kevin Wing, "DoorDash now delivers electronics; viewer got stiffed on $500 refund", CBS News (July 1, 2024) , https://www.cbsnews.com/sacramento/news/doordash-now-delivers-electronics-viewer-got-stiffed-on-500-refund-call-kurtis-investigates/ ↑

5. Jason Collins, "Customer Service Chatbots Earn Mixed Reviews as People Still Prefer Human Conversations," Civic Science (July 24. 2024), https://civicscience.com/customer-service-chatbots-earn-mixed-reviews-as-people-still-prefer-human-conversations/#:~:text=Customer%20Service%20Satisfaction%20Across%20the%20Board%20Is%20Mixed&text=CivicScience%20learned%20that%2C%20in%20general,those%20who%20were%20not%20satisfied. ↑

6. Danielle Commisso, "Do Chatbots Live Up to the Hype? Consumers Weigh In,", Civic Science (Apr. 28, 2022). https://civicscience.com/do-chatbots-live-up-to-the-hype-consumers-weigh-in/ ↑

7. New York State Attorney General, "Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips," https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers Accessed on Mar. 10, 2025. ↑

8. Ibid. ↑

9. Office of the Illinois Attorney General, "ATTORNEY GENERAL RAOUL ANNOUNCES $11.25 MILLION SETTLEMENT AGREEMENT WITH DOORDASH OVER DELIVERY DRIVER TIPS," https://illinoisattorneygeneral.gov/news/story/attorney-general-raoul-announces-1125-million-settlement-agreement-with-doordash-over-delivery-driver-tips Accessed on Mar. 10, 2025. ↑

Date of Hearing: March 18, 2025

Fiscal:

ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION

Rebecca Bauer-Kahan, Chair

ABPCA Bill Id:AB 578 (

Author:Bauer-Kahan) – As Introduced Ver:February 12, 2025

PROPOSED AMENDMENTS

SUBJECT: Food delivery platforms: customer service

SYNOPSIS

In 2020, the Legislature adopted the Fair Food Delivery Act (Act). The Act prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. Since then, many measures have been chaptered that have expanded the protections for consumers, restaurants, and workers on food delivery platforms.

This author-sponsored bill seeks to strengthen consumer protections by ensuring that food delivery platforms provide the level of customer service consumers request. Specifically, this bill requires that food delivery platforms enable a streamlined way for consumers to interact with a live customer service representative if necessary, rather than only an automated system. This bill also requires that refunds for missed, partial, and incorrect deliveries can be remedied by requiring the platform to provide refunds that account for all associated fees, tips, and cost differences between the incorrect order and what the consumer receives. Consumers must also have the option to receive refunds via their original payment method.

In light of recent settlements between major food delivery platforms and state Attorneys General, the committee is offering amendments, set forth in Comment 5, to address wage payment structures that disadvantage workers. This includes prohibiting the use of gratuity or tips to offset the guaranteed pay that the platform offers workers for delivery. Furthermore, the amendments provide a mechanism for greater transparency in the pay that workers receive.

This bill is opposed by TechNet and California Chamber of Commerce.

THIS BILL:

1. Requires that a food delivery platform have a clear and conspicuous way for customers to contact a natural person when interacting with customer service. This provision does not prohibit the use of automated systems to address customers concerns.
2. Requires that food delivery platforms provide a full refund including all taxes, commissions, fees, and gratuities, to the customer if an order is not delivered or the wrong order is delivered.
3. In the event of a partially delivered order, requires that food delivery platforms charge the customer only for the amount delivered and prorate all taxes, commissions, and fees so they are commensurate with the amount the customer pays for the partial order.
4. In the event of a partially delivered order, requires food delivery platforms to provide a mechanism that allows the customer to adjust any gratuity that was included in the order prior to its delivery.
5. Requires that food delivery platforms provide a mechanism that allows the customer to request that the amount of the refund be returned to the original method of payment.

EXISTING LAW:

1. Establishes the Fair Food Delivery Act, which prohibits food delivery platforms, as defined, from arranging for the delivery of an order from a food facility, as defined, without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (Bus. & Prof Code § 22598 et seq.)
2. Defines:
3. “Food delivery platform” as an online business that acts as an intermediary between consumers and multiple food facilities to submit food orders from a consumer to a participating food facility and to arrange for the delivery of the order from the food facility to the consumer.
4. “Food facility,” via a cross reference to Health and Safety Code section 113789, which generally defines that term as an operation that stores, prepares, packages, serves, vends, or otherwise provides food for human consumption at the retail level, as specified.
5. “Online order” as an order for food or beverage placed by a customer through or with the assistance of a food delivery platform, including, but not limited to, a telephone order, for delivery.
6. “Purchase price” as the price, as listed on the menu, for the items contained in an online order. This definition does not include taxes or gratuities that may make up the total amount charged to the customer of an online order. (Bus. & Prof. Code § 22598.)
7. Prohibits a food delivery platform from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility. (Bus. & Prof. Code § 22599(a).)
8. Requires a food delivery platform to provide to a food facility a mechanism to do both of the following:
   1. Remove the food facility, including its name, address, logo, or menu listing, from the platform within three business days of receiving a request to be removed from the platform.
   2. Direct the food delivery platform to disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility. (Bus. & Prof. Code § 22599(b).)
9. Requires a food delivery platform to inform a food facility of both of the following prior to signing an agreement:
   1. The fees charged by the food delivery platform for each service plan offered.
   2. The features included in each service plan, as applicable. (Bus. & Prof. Code § 22599(c).)
10. Require a food delivery platform to inform a food facility of all of the following:
    1. How charges for customer order and delivery errors are calculated.
    2. How charges related to errors are allocated between the food delivery platform and the food facility.
    3. The process for food facilities to dispute charges related to errors, including whether disputes may be subject to automatic resolution. (Bus. & Prof. Code § 22599(d).)
11. Makes it unlawful for a food delivery platform to do the following:
    1. Charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platform’s website by the food facility at the time of the order.
    2. Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity for a delivery order shall be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage. Any tip or gratuity for a pickup order shall be paid by a food delivery platform, in its entirety, to the food facility. (Bus. & Prof. Code § 22599.1(a).)
12. Requires a food delivery platform to disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including the following information:
    1. The purchase price of the food and beverage.
    2. A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.
    3. Each fee, commission, or cost charged to the customer by the food delivery platform.
    4. Any tip or gratuity. (Bus. & Prof. Code § 22599.1(b).)
13. Prohibits a listing website from associating a telephone number or other method of direct communication with a food facility on the listing website’s internet website or application if the listing website knows the use of that telephone number or other method of direct communication will result in a forwarded call. (Bus. & Prof. Code § 22599.1(c)(1).)
14. Requires a listing website to clearly and conspicuously disclose if an order placed through a telephone number or other interface on the listing website’s internet website or application may result in a fee, commission, or cost paid to a party other than the food facility and shall identify that other party. (Bus. & Prof. Code § 22599.1(c)(2).)
15. Requires a food delivery platform to clearly and regularly disclose to the food facility and the customer the status of the order, including all of the following:
    1. The method of delivery.
    2. The anticipated date and time of the delivery of the order.
    3. Confirmation that the order has been successfully delivered or that the delivery cannot be completed. (Bus. & Prof. Code § 22599.1(d).)
16. Establishes the Unfair Competition Law, which provides a statutory cause of action for any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising, including over the internet. (Bus. & Prof. Code § 17200 et seq.)

COMMENTS:

1. Author’s statement. According to the author:

The rise of food delivery platforms has led to increased consumer complaints about undelivered orders, lack of refunds, and unreliable customer service. Many customers struggle to get their money back when orders are incomplete or never arrive, while automated customer service systems leave them without assistance. This legislation ensures full refunds for failed deliveries. Simply providing credits is neither sufficient nor fair, as customers are rightfully entitled to recover their money rather than accepting a substitute. Further, AB 578 mandates live customer support representatives to assist with issues, which improves accessibility and user experience. Finally, to ensure gratuities reflect service quality, this bill allows tips to be adjusted after failed deliveries. These changes promote fairness and transparency to ensure consumer protection.

2) The Fair Food Delivery Act. Several lawsuits against food delivery platforms have been filed across the country alleging, among other unscrupulous behaviors, unfair business practices, labor violations, and the misuse of restaurants’ names and logos.^[1] One type of predatory practice involved listing restaurants on food delivery websites without their consent,^[2] which risks overwhelming restaurant operations, creating quality and safety problems, and eroding customer bases.

In response, the Legislature adopted the Fair Food Delivery Act of 2020. The Act prohibits food delivery platforms from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility.

AB 286 (Gonzalez, Ch. 513, Stats. 2021) expanded the Act by prohibiting a food delivery platform from marking up the price of the food and beverages it delivers or retaining tips or gratuities it receives. AB 286 also requires food delivery platforms to provide itemized cost breakdowns to customers and food facilities that include the purchase price of the food and beverage; a notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, except as specified; each fee, commission, or cost charged to the customer by the food delivery platform; and any tip or gratuity.

Last session, AB 502 (Lee, Ch. 164, Stats. 2023) addressed issues with consumer communications intended for food facilities that are placed through a listing website. It prohibits such websites from associating methods of communication with a food facility where they know that use of that method will result in a “forwarded call,” as defined. AB 502 also requires certain disclosures with respect to fees, commissions, and other costs in connection with orders placed through such websites.

Last year, SB 1490 (Durazo, Ch. 898, Stats, 2024) addressed issues with transparency in the delivery process and to inform the food facilities of specified details, including information about how errors are handled and charged and the various fees and features involved with the platform’s various plans. It also requires platforms to provide food facilities a mechanism for removing themselves and for directing the platform to disclose to consumers the delivery fee charged to the facility.

3) Food delivery platforms have unclear refund policies. Grubhub, DoorDash, and Uber Eats dominate the food delivery market, yet none of these platforms have a clear refund policy. All three state that sales are final, and refunds are issued at their discretion, with no obligation to provide reimbursement.^[3],[4],[5] Last year, a Rocklin resident was unable to receive a refund from DoorDash for virtual reality goggles he ordered through the platform because of their “no obligation to issue a refund”.^[6] Although the retailer refunded DoorDash for the purchase, the platform failed to pass the refund on to the customer until after the case received public attention.

These unclear refund policies become increasingly complicated for deliveries that are either wrong or incomplete. Consumers typically pay tips, service charges, and other fees upfront, assuming their orders will be fulfilled correctly. If an order is incomplete, the consumer may receive a refund for the missing items, but may not be reimbursed for associated tips and fees. For example, consider an order for ten pizzas totaling $200 and the consumer pays an additional $100 for the fees and tip. If only one of those pizzas is delivered, then the consumer would likely be refunded for the $180 of pizza that was not delivered, but it is unclear with current policies in place if the consumer can be refunded any amount of the $100 used for the tip and fees paid corresponding to the original $200 order, not the $20 order that was actually delivered.

This is further compounded by the increasing reliance on chatbots to assist with customer service. Many consumers find these automated systems frustrating, particularly when dealing with complex refund request. Reports from last year showed that 45% of American consumers had an unfavorable feeling toward the use of chatbots for customer service while only 19% were favorable.^[7] Chatbots can become increasingly difficult to work with if they are trained to respond in ways that align with the platform’s policies, especially if the policies, such as those for refunds, are unclear. This is likely why about 60% of people prefer live chats with human customer service agents over a chatbot.^[8]

4) What this bill would do. AB 568 would ensure that consumers have the ability to communicate with a natural person when interacting with customer service on a food delivery platform. This bill does not outlaw the use of automated chatbots by online delivery platforms, but does require food delivery platforms to include a readily accessible way to interact with a natural person. This requirement is intended to provide consumers with the option to remedy their grievances in whatever way best suits them.

This bill also would require that food delivery platforms provide a full refund including taxes, other fees, and gratuities to a customer for an undelivered or incorrect order. For partial orders, this bill requires the food delivery platforms to offer prorated refunds commensurate with the amount paid for the partial order. This bill also requires the food platforms to allow customers to adjust gratuity for partially delivered orders and that all refunds must be able to be returned to the original payment method. These practices were previously unclear with regard to how refunds were dispersed. Recent reports suggest that refund fraud may be on the rise on food delivery platforms and this bill could aid bad actors in defrauding these companies.^[9] However, good faith consumers should not be penalized for the actions of those who take advantage of these systems. Platforms still retain the power to choose which consumers can use their platforms and have the right to investigate refund claims as fraudulent.

5) Amendments. Food delivery platforms have recently come under fire due to unfair wage practices. The Attorneys General for both Illinois and New York have reached settlements with DoorDash regarding their use of tips to offset guaranteed pay.^[10] The New York AG’s investigation found that DoorDash was using a deceptive pay model whereby delivery drivers were only able to see their tips if the tip was greater than the payment amount DoorDash guaranteed. For example, if a driver was guaranteed $10 and the customer tipped $4, the driver would be paid $10 with the customer contributing $4 and DoorDash contributing $6. These cases resulted in a $16.25 million settlement in NY and a $11.25 million settlement in Illinois.^[11],[12] These types of practices may exist in California because the law currently only prohibits the retaining of any tip or gratuity, and as the gratuity is not retained by DoorDash, it may not violate the law, but arguably it violates the Legislature’s intent.

Due to these recent settlements, the committee amendments would ensure that the workers making the deliveries are entitled to both the guaranteed pay the food delivery platforms offer as well as the gratuity the consumer pays. To ensure delivery drivers are apprised of their compensation, the committee amendments would also increase the transparency of the payment models to the drivers.

The amendments read:

22599.1. (a) It is unlawful for a food delivery platform to do either of the following:

(1) Charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platform’s internet website by the food facility at the time of the order.

(2) Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity for a delivery order shall be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage. Any tip or gratuity for a pickup order shall be paid by a food delivery platform, in its entirety, to the food facility.

(3) Maintain a payment model that uses any amount designated as tips or gratuity to offset the base pay to the person delivering the food or beverage.

(b) A food delivery platform shall prominently disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, but not limited to, all of the following information:

(1) The purchase price of the food and beverage.

(2) A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.

(3) Each fee, commission, and any other cost charged to the customer by the food delivery platform.

(4) Any tip or gratuity payable to the delivery driver or food facility.

(c) A food delivery platform shall prominently disclose to the person delivering the food or beverage an accurate, clearly identified, and itemized breakdown of the pay received for a delivery including, but not limited to, the base pay, gratuity or tips, and any promotional bonuses.

(dc)(1) A listing website shall not associate a telephone number or other method of direct communication with a food facility on the listing website’s internet website or application if the listing website knows the use of that telephone number or other method of direct communication will result in a forwarded call.

(2) A listing website shall clearly and conspicuously disclose if an order placed through a telephone number or other interface on the listing website’s internet website or application may result in a fee, commission, or cost paid to a party other than the food facility and shall identify that other party.

(ed) A food delivery platform shall clearly and regularly disclose to the food facility and the customer the status of the order, including all of the following:

(1) The method of delivery.

(2) The anticipated date and time of the delivery of the order.

(3) Confirmation that the order has been successfully delivered or that the delivery cannot be completed.

(fe) A food delivery platform shall include a clear and conspicuous customer service feature that allows a customer to contact a natural person. The food delivery platform may use an automated system to address customer service concerns. However, if the automated system is unable to address the customer’s concerns, the food delivery platform shall ensure that the customer is able to promptly connect with the natural person in order to address the concern.

ARGUMENTS IN OPPOSITION: In opposition to the bill, California Chamber of Commerce and TechNet, argues:

At a functional level, we have concerns that some of these provisions are unworkable. For example, some of the fees associated with delivery are not percentage-based and thus cannot be “pro-rated” ... notably there may be a flat fee to delivery orders below a certain total value. We also have concerns with the bill’s focus on refunding or altering gratuities. The gratuity for an order is customarily already provided to the delivery person by the time a refund or complaint is made – meaning that unpacking that transaction and re-claiming a gratuity may not be feasible for the delivery platform. As a result, though we are sensitive to the author’s intention regarding clear and efficient refund policies, we have some concerns with the present language that we are continuing to discuss with member companies.

In addition, due to the early nature of this hearing (and related letter deadline) we are continuing to gather feedback regarding the proposed Business & Professions Code Section 22599.1 related to customer service and will engage with your office as concerns arise. We believe concerns may arise related to how the bill’s requirement of “promptly connect[ing]” to customer service may be operationalized, as well as how to include a “clear and conspicuous customer service” allowing customers to reach a “natural person” on the limited screen space of a mobile app. However, at this time, we are still awaiting more feedback from members on these issues.

For these reasons and others, we must OPPOSE AB 578.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

California Chamber of Commerce
TechNet

Analysis Prepared by: John Bennett / P. & C.P. / (916) 319-2200

1. See Jaya Saxena Who’s Paying for the Great Delivery Wars? (Jan. 21, 2021) Eater.com, available at https://www.eater.com/22224695/uber-eats-postmates-grubhub-delivery-wars-2021. ↑

2. Janelle Bitker & Shwanika Narayan, Grubhub, DoorDash rush to add restaurants. Customers and drivers pay the price (Feb. 2, 2020) San Francisco Chronicle, available at https://www.sfchronicle.com/business/article/Grubhub-DoorDash-rush-to-add-restaurants-15023372.php. ↑

3. DoorDash, “Consumer Terms and Conditions,” https://help.doordash.com/legal/document?type=cx-terms-and-conditions&region=US&locale=en-US, Accessed on Mar. 10, 2025. ↑

4. Uber, “U.S. Terms of Use,” https://www.uber.com/legal/en/document/?name=general-terms-of-use&country=united-states&lang=en, Accessed on Mar. 10, 2025. ↑

5. Grubhub, “Terms of Use,” https://www.grubhub.com/legal/terms-of-use, Accessed on Mar. 10, 2025 ↑

6. Kurtis Ming and Kevin Wing, “DoorDash now delivers electronics; viewer got stiffed on $500 refund”, CBS News (July 1, 2024) , https://www.cbsnews.com/sacramento/news/doordash-now-delivers-electronics-viewer-got-stiffed-on-500-refund-call-kurtis-investigates/ ↑

7. Jason Collins, “Customer Service Chatbots Earn Mixed Reviews as People Still Prefer Human Conversations,” Civic Science (July 24. 2024), https://civicscience.com/customer-service-chatbots-earn-mixed-reviews-as-people-still-prefer-human-conversations/#:~:text=Customer%20Service%20Satisfaction%20Across%20the%20Board%20Is%20Mixed&text=CivicScience%20learned%20that%2C%20in%20general,those%20who%20were%20not%20satisfied. ↑

8. Danielle Commisso, “Do Chatbots Live Up to the Hype? Consumers Weigh In,”, Civic Science (Apr. 28, 2022). https://civicscience.com/do-chatbots-live-up-to-the-hype-consumers-weigh-in/ ↑

9. Alex Bitter “Customers are fraudulently asking delivery apps for refunds on food they received”, Business Insider (Feb. 26, 2025), Accessd at https://www.msn.com/en-ie/money/other/customers-are-fraudulently-asking-delivery-apps-for-refunds-on-food-they-received/ar-AA1zPzLV?apiversion=v2&noservercache=1&domshim=1&renderwebcomponents=1&wcseo=1&batchservertelemetry=1&noservertelemetry=1. ↑

10. New York State Attorney General, “Attorney General James Secures $16.75 Million from DoorDash for Cheating Delivery Workers Out of Tips,” https://ag.ny.gov/press-release/2025/attorney-general-james-secures-1675-million-doordash-cheating-delivery-workers Accessed on Mar. 10, 2025. ↑

11. Ibid. ↑

12. Office of the Illinois Attorney General, “ATTORNEY GENERAL RAOUL ANNOUNCES $11.25 MILLION SETTLEMENT AGREEMENT WITH DOORDASH OVER DELIVERY DRIVER TIPS,” https://illinoisattorneygeneral.gov/news/story/attorney-general-raoul-announces-1125-million-settlement-agreement-with-doordash-over-delivery-driver-tips Accessed on Mar. 10, 2025. ↑