[co-author: Stephanie Kozol]*
In August, District of Columbia Attorney General (AG) Brian Schwalb issued a Supplemental Business Advisory (advisory) to provide guidance and examples to restaurants for complying with their legal obligation under the District’s Consumer Protection Procedures Act (CPPA) to adequately disclose all fees, including service fees, to customers. See D.C. Code § 28-3901, et seq. The advisory clarifies that the CPPA does not prohibit restaurants from charging such fees or surcharges, but emphasizes that “these fees may violate the CPPA if they are not timely, prominently, and clearly disclosed to diners before they place their orders.”
This recent advisory builds upon prior consumer alerts issued by the District’s AG, which included examples of compliant and noncompliant service fee disclosure. The press release accompanying the advisory highlights the growing confusion among consumers regarding the allocation of service fees, whether they are intended to cover operational expenses or serve as tips to servers — as a reason for the issuance of the guidance. The advisory provides the following example, among others, as a compliant way to disclose a service fee: “A 20% service fee will be added to all guest checks and will be used to cover our increasing operational costs. This fee is not a tip.”
According to the advisory, restaurants must prominently disclose the existence and amount of fees before diners place their orders. This can be done through menus, signage, or orally, preferably in the same manner that prices are communicated. It is crucial that these fees do not come as a surprise to customers. The advisory explicitly states that restaurants must not bury or obscure this information in fine print.
Why It Matters
The AG’s issuance of the advisory underscores the importance of transparent fee disclosure in the restaurant industry. It also serves as a reminder that similar issues have arisen recently in relation to food delivery platform services such as Grubhub. Restaurants should take note of these developments and ensure that their fee disclosure practices comply with the guidance to avoid potential CPPA violations and to maintain consumer trust.
*Senior Government Relations Manager
