ICLE Comments to FTC on Online Food-Delivery Service Fees
I. Introduction and Background
The International Center for Law & Economics (ICLE) is a nonprofit, nonpartisan research center that applies economic analysis to legal and regulatory questions. These comments respond to the Federal Trade Commission’s (FTC) Advance Notice of Proposed Rulemaking (ANPRM) on unfair or deceptive fee practices by online food-delivery platforms, published April 16, 2026. The Commission issued the ANPRM under Section 18 of the FTC Act and seeks written comments, data, and arguments on whether a trade regulation rule is needed to address fee practices in online food delivery.[1]
Hidden mandatory fees and false representations about tip distribution can harm consumers. They also fall within the kinds of practices that may violate Sections 5 and 12 of the FTC Act.[2] As such, they are subject to enforcement through Section 5(b), Section 13(a), or Section 13(b). As the ANPRM notes, the FTC has already brought several such cases,[3] and the Commission may continue to issue complaints when it has “reason to believe” conduct violates the FTC Act. ICLE supports targeted enforcement against illegal practices.
That enforcement record does not justify a sectorwide rule at this stage. A small set of enforcement matters involving alleged conduct by large national platforms does not establish prevalence across a heterogeneous market that includes merchant-operated first-party delivery services, third-party intermediaries, ghost kitchens, and regional operators. Nor does the current record establish the consumer-expectation evidence, cost-benefit analysis, or small-entity effects that should precede any shift from targeted enforcement to sectorwide regulation.
Existing Section 5 enforcement, formal business guidance clarifying which fee practices the Commission considers deceptive, and coordination with state attorneys general remain more proportionate responses than sectorwide rulemaking on the current record. The comments that follow make six points.
First, hidden mandatory fees and false fee-related representations are already reachable through existing Section 5 enforcement tools. Formal business guidance could extend those standards marketwide without the costs and rigidity of rulemaking. A rule does not follow from the enforcement record alone.
Second, the current record does not yet satisfy the statutory showings Section 18 requires before the Commission proceeds from an ANPRM to an NPRM or final rule, including prevalence, consumer-expectation evidence, and cost-benefit analysis. Indeed, absent a more developed evidentiary record, the ANPRM itself appears premature.
Third, should the Commission later develop a record satisfying those requirements, any rule must distinguish drip pricing—the strategic withholding of known mandatory fees—from the legitimate later disclosure of charges that cannot be calculated until the ordering process reveals customer- and order-specific variables.
Fourth, cost-of-service pricing requirements, as contemplated in Question 43, would constitute price regulation rather than disclosure regulation and would exceed the Commission’s Section 18 authority.
Fifth, any rule must apply with competitive neutrality to both third-party platforms and merchant-operated first-party delivery services, while accounting for disproportionate compliance burdens on small operators through safe harbors or model disclosure templates.
Finally, a sectorwide rule creates supply-side risks that targeted enforcement does not. A disclosure mandate that effectively constrains variable fee structures can function as a de facto price cap, driving service exits from low-density and high-cost delivery zones where consumers have the fewest alternatives. The Commission must analyze those distributional effects before issuing any NPRM.
II. Existing Law Reaches Fee Deception Without New Rules
The practices described in the ANPRM’s cited enforcement matters fall within familiar Section 5 territory. The complaints allege hidden mandatory fees, misleading free-delivery representations, and false statements about tip distribution.[4] Where proven, hidden mandatory fees and materially misleading representations about fees, “memberships,” or tip distribution fit comfortably within established deception doctrine.[5]
The critical question, therefore, is not whether the FTC Act can reach such practices; it plainly can. The relevant question is whether a small number of enforcement matters—resolved through settlements without merits determinations—justify imposing a uniform Section 18 rule across the entire food-delivery sector.
As discussed below, the current record does not support that conclusion. Existing market dynamics already create strong incentives for fee transparency, while the Commission’s current enforcement tools already permit targeted remedies against deceptive conduct. The cited enforcement matters also demonstrate that behavioral remedies, consent orders, guidance, and state-law enforcement can address identified harms without imposing inflexible, sectorwide mandates. At minimum, the current record counsels further analysis of the prevalence of specific practices, and the effectiveness of existing interventions, before the Commission undertakes Section 18 rulemaking.
A. Competitive Dynamics Already Promote Fee Transparency
Before assessing what enforcement can accomplish, it is important to establish the market conditions against which any remedy would operate. Food-delivery consumers face near-zero switching costs. A user dissatisfied with the fees on one platform can instantly open a competing app and even compare several side by side. That competitive structure creates strong private incentives for fee transparency. Platforms that bury charges until checkout risk abandoned orders and negative user experiences that quickly surface in ratings, reviews, and churn data.
The ANPRM itself notes that at least one platform advertises the absence of delivery and service fees on orders above $50 as a selling point.[6] That is precisely what competitive markets tend to produce when consumers value fee transparency. Advertising transparent pricing is not evidence of market failure requiring regulation; it is evidence that transparency has already become a competitive dimension.
These market conditions also bear on the proper scope of any agency response. The Commission’s pleadings in FTC v. Grubhub Inc. acknowledge that concealed fees can harm honest competitors that do not engage in similar practices.[7] That theory may support targeted enforcement against deceptive fee presentation. It does not establish that any particular form of deception is prevalent industrywide, much less that the entire industry engages in such conduct. A rule binds compliant firms and violators alike; enforcement reaches only violators.
The cited enforcement matters also suggest that the Commission’s existing enforcement tools already provide the relevant corrective mechanism. At least one complaint alleges that the challenged practice changed after the firm learned it was under FTC investigation.[8] That is the deterrent effect enforcement is designed to produce.
The relevant empirical question for the Commission (Questions 29a-b) is whether drip pricing is self-reinforcing or self-correcting in this market. The evidence cited in the ANPRM—including competitive advertising centered on fee transparency, completed enforcement matters that produced behavioral remedies, and fee-transparency statutes enacted in five states—suggests that market and enforcement dynamics are already addressing the problem.
A rule mandating what competition is already delivering would be, at best, redundant and, at worst, counterproductive. Such a rule would replace disclosure as a competitive differentiator with a uniform compliance floor. At minimum, the current record suggests that the Commission should assess the ongoing prevalence of specific harmful practices, as well as the effectiveness of existing state and federal interventions, before initiating Section 18 rulemaking.
B. Existing Enforcement Tools Are Sufficient
The Commission’s existing orders demonstrate that targeted relief can address the conduct identified in the ANPRM. One order requires clear and conspicuous disclosure of all fees on any page referencing the cost of a delivery order, including the amount or percentage—or range—of additional fees.[9] Another requires firms advertising free or discounted delivery to disclose that other fees may apply.[10] The driver-pay orders prohibit misrepresentations about tips, earnings, and reductions in stated pay after acceptance.[11] These are targeted behavioral remedies that govern how covered firms present fees and driver-pay information without imposing new obligations across the entire market. They are also backed by the FTC’s existing civil-penalty authority.
If the Commission nevertheless proceeds to rulemaking, these orders identify the outer boundary of what the current record can support. A rule requiring clear disclosure of mandatory fees before a consumer commits to an order could address the timing harms identified in the ANPRM. A broader rule mandating total-price display, restricting fee structures, or requiring cost-reflective pricing would exceed what the current record establishes as necessary.
For firms not covered by existing orders, the Commission has tools short of rulemaking to extend these standards. The Commission’s settlements with the nation’s largest delivery operators received substantial trade coverage and put the broader market on notice. Likewise, the Commission’s December 2025 warning letters to 13 property-management software vendors illustrate how enforcement can reach the technological layer facilitating fee presentation without imposing sectorwide rules.[12] An analogous approach in the food-delivery market—through guidance directed at checkout-flow software vendors and platform engineering teams—could establish clear standards for fee-presentation timing across the market without the costs and rigidity of a rule.
More broadly, formal business guidance could accomplish much of what a trade regulation rule would target without the attendant costs, rigidity, and legal risk. The Commission could issue guidance documents or policy statements explaining which food-delivery fee practices it considers deceptive under Section 5. Such guidance could explain, for example, that mandatory fixed charges should not first appear only after a consumer has invested time building an order; that fee labels should accurately describe the nature and recipient of the charge; and that misrepresenting a fee’s refundability or optionality violates the Act.
This approach would place the entire market—not merely firms subject to consent orders—on notice of enforcement risk. It would also provide platforms with clearer compliance targets, reducing the uncertainty reflected in the ANPRM’s open-ended questions. Unlike a trade regulation rule, guidance can evolve alongside market practices, does not require the Commission to satisfy Section 57a’s prevalence and cost-benefit thresholds, and does not expose the agency to the litigation risks accompanying a final rule.
C. Existing Statutory Tools Already Provide Extensive Remedies
The Supreme Court’s unanimous decision in AMG Capital Management, LLC v. FTC held that Section 13(b) of the FTC Act does not “authorize the Commission to seek, and a court to award, equitable monetary relief such as restitution or disgorgement.”[13] At the same time, the Court left untouched the FTC’s authority to use Section 13(b) to obtain injunctions against unlawful conduct, as well as its authority under Sections 5 and 19 to obtain restitution on behalf of consumers.[14]
In short, the Commission retains several avenues to obtain behavioral remedies, monetary relief, or both for violations of Section 5, subject to congressionally imposed limitations:
- Under Section 5(b), the Commission may bring and adjudicate complaints internally and issue cease-and-desist orders upon finding a violation. Under Section 5(g), such orders generally become final either after judicial review affirms them or after the 60-day period for seeking review expires.
- Under Section 5(l), the Commission may seek civil penalties against respondents that violate final Commission cease-and-desist orders.
- Under Section 13(b), the Commission may proceed directly to federal court to obtain temporary injunctive relief or, “in proper cases,” permanent injunctions, without first conducting an administrative hearing or issuing a cease-and-desist order.
- Under Section 19, the Commission may obtain “such relief as the court finds necessary to redress injury to consumers or other persons,” including “the refund of money or return of property [and] the payment of damages.” 15 U.S.C. § 57b(b).
Cases brought under Sections 5, 13(b), or 19 may also be resolved through consent orders without findings—or allocutions—of liability. Such settlements may prudently allow both the FTC and respondents to manage litigation risk and avoid the costs of full administrative or judicial proceedings. Even so, while we do not question the Commission’s “reason to believe” allegations underlying these complaints, or the investigative work of Commission staff, settlements necessarily limit the extent of agency experience developed through fully litigated matters, not merely the creation of precedent.
The differing theories advanced in FTC v. Grubhub Inc. and FTC v. Maplebear Inc. further underscore this point. The presence of unfairness allegations in Grubhub, and their absence in Instacart, is especially salient given the statutory limitations Congress imposed on the Commission’s unfairness authority through Section 5(n). Those limitations bear directly on any consumer-protection rulemaking the Commission may contemplate under Section 18.
Assessing both the prevalence of allegedly unfair food-delivery fee practices and the Commission’s experience with those practices is complicated further by the controversy surrounding the FTC’s 2022 Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act.[15] The Commission adopted that policy statement on a party-line vote under former Chair Lina M. Khan.[16]
State attorney-general co-enforcement actions may also provide alternative paths to monetary relief unavailable to the Commission after AMG Capital. The Colorado/Greystar rental-housing matter illustrates how state-law authority may supply monetary remedies independent of the FTC Act’s limitations.[17]
III. Section 18 Requires a Stronger Record Before Rulemaking
Section 18 imposes substantive obligations at each stage of a trade regulation rulemaking. These are not procedural formalities. We recognize that the ANPRM stage is preliminary, but an ANPRM is not merely a request for information or a staff economic or policy study. It is the first step in a rulemaking process distinct from the Commission’s general investigative and study authority—and one subject to statutory constraints beyond those governing legislative rulemaking generally.
At the ANPRM stage, the Commission must describe the area of inquiry, regulatory objectives, and possible regulatory alternatives under consideration. Before issuing an NPRM, the Commission must have reason to believe that the targeted unfair or deceptive acts or practices are prevalent, as shown by cease-and-desist orders or other information indicating a widespread pattern of unfair or deceptive conduct. A final rule’s Statement of Basis and Purpose must then address: (1) the prevalence of the acts or practices the rule targets, (2) the manner and context in which those practices are unfair or deceptive, and (3) the rule’s economic effects on small businesses and consumers.[18]
Those requirements matter here. As discussed below, the ANPRM’s current record does not yet establish industrywide prevalence across a highly heterogeneous food-delivery market. Nor does it establish a consumer baseline for food-delivery pricing, explain how consumer expectations vary across first-time and repeat users, or show that laboratory evidence on drip pricing can support a sectorwide rule. The Commission also must account for existing enforcement, state laws, and its own recent decision to exclude food delivery from the final Unfair or Deceptive Fees Rule.
After Loper Bright Enterprises v. Raimondo, courts will independently assess whether the Commission has satisfied each statutory element, without deferring to the agency’s own view of the record’s adequacy.[19] The online food-delivery market processes more than $9 billion in monthly sales and serves more than 138 million Americans.[20] A sectorwide rule covering that market warrants a correspondingly thorough record.
A. The Record Does Not Establish Industrywide Prevalence
The food-delivery market is highly heterogeneous. It includes large third-party platforms, merchant-operated delivery services, ghost kitchens, restaurant- and grocery-delivery services, and small regional operators. The ANPRM itself defines “online food delivery platforms” broadly, and its questions expressly encompass merchants operating their own online delivery platforms.
The Commission’s current enforcement record does not establish that deceptive fee practices are prevalent across this diverse population. The cited matters involve only a small number of large, national, third-party platforms, and all concluded through non-litigated settlements. That record does not justify extending a uniform rule across the broader food-delivery market.
The mismatch between the enforcement record and the scope of the contemplated rule is especially significant. The Commission’s complaints target practices associated with major multisided intermediaries and their particular fee structures. Yet the proposed rule would apply equally to those firms and to companies operating their own delivery websites, including small businesses. The hidden-fee practices alleged in the ANPRM arise from specific platform conduct, not from the food-delivery market generally.
B. The ANPRM Does Not Establish a Consumer Baseline
The ANPRM does not establish what baseline expectations consumers hold about food-delivery pricing, how the Commission would measure those expectations, or whether they are consistent across consumer groups. Yet the Commission’s deception theory depends on the premise that consumers hold a “reasonable expectation” about what a displayed price includes, and that platforms violate that expectation by later adding fees.
No settled consumer baseline exists for food-delivery pricing. Unlike hotel-room rates, where decades of convention have established that an advertised price generally reflects the nightly rate before taxes, food-delivery pricing lacks a comparable market convention. The market has evolved rapidly over the past decade, and fee structures vary substantially across platforms. Some platforms charge flat delivery fees; others impose percentage-based service fees; still others bundle some or all costs into menu prices.
Consumer expectations also likely vary with experience. A first-time user’s expectations differ materially from those of a customer placing a hundredth order. The ANPRM’s own statistics indicate a large repeat-user population that has encountered delivery fees across multiple transactions.[21] Yet the ANPRM does not present evidence regarding the share of transactions involving first-time versus repeat users, nor does it address whether repeat users—who already possess information about a platform’s fee structure from prior orders—can reasonably claim deception.
The ANPRM’s own evidence also undercuts the need for a sectorwide disclosure mandate. The Commission’s enforcement record suggests that consumers can identify allegedly deceptive fee practices when they encounter them. One complaint references “hundreds of thousands of consumer complaints” concerning the challenged conduct.[22] Another cites internal research showing that consumers viewed a purported free-delivery offer as misleading when a service fee still applied, and that consumers did not distinguish between delivery fees and service fees in the manner the platform intended.[23]
That evidence suggests the relevant problem is not a marketwide information failure requiring regulatory correction. Consumers appear capable of recognizing and reacting to allegedly deceptive practices. The more plausible issue is deceptive labeling or presentation by specific firms—a problem that targeted enforcement already addresses.
More fundamentally, the behavioral-economics literature cited in the ANPRM cannot substitute for two evidentiary showings the Commission still lacks: first, evidence establishing the baseline pricing expectations that reasonable food-delivery consumers actually hold; and second, evidence explaining how the Commission’s deception theory applies to the repeat-user majority responsible for much of the market’s transaction volume.
The ANPRM asks how and when platforms disclose fee information, but it does not establish how consumers process those disclosures or how prior experience shapes expectations. A rule premised on deception should first establish what consumers actually believe and how they form those beliefs. The Commission cannot simply assume that any fee excluded from the menu price is necessarily unexpected.
Nor does the behavioral-economics literature resolve this problem. As Todd Zywicki, Geoffrey Manne, and Kristian Stout explain, the same asserted behavioral biases can support contradictory predictions about consumer behavior, rendering the theory “non-falsifiable, malleable, self-contradictory, and, often, trotted out only when convenient.”[24]
C. The Record Remains Underdeveloped
The ANPRM appropriately seeks to develop the record. The Commission should also recognize that the existing evidence cannot yet support a notice of proposed rulemaking.
Significant evidentiary gaps remain. These include systematic data on platform types and sizes (Questions 1-7); fee categories and disclosure timing (Questions 9, 12-17, 23); consumer-perception evidence specific to food delivery; and analysis of whether existing state laws already adequately address the challenged conduct in jurisdictions where those laws apply (Questions 22, 58).
We appreciate that the ANPRM requests data and other systematic evidence concerning fee-disclosure practices in food delivery. FTC staff are also well positioned to survey and synthesize the existing literature and available evidence. That empirical analysis and reporting should precede further rulemaking initiatives.
The behavioral studies cited in the ANPRM—Alexander Rasch et al. (2020) and Shelle Santana et al. (2020)—do not fill these gaps. Both studies involve laboratory experiments conducted in artificial settings without repeat-purchase dynamics, and neither study addresses food delivery specifically.[25] The “uniformly underwhelming track record” of converting “anomalies found in economics lab experiments into real-world realities” in the consumer-finance context should give the Commission serious pause before relying on analogous laboratory findings to justify a sectorwide rule for food delivery.[26]
The Commission’s own recent actions reinforce the need for caution. In January 2025, the Commission excluded food delivery from the final Unfair or Deceptive Fees Rule, explaining that it would “proceed incrementally.”[27] Food-delivery fee concerns were already before the Commission during that rulemaking. The subsequent settlements add enforcement examples, but the ANPRM still must explain why those examples transform targeted deception matters into evidence of sectorwide prevalence.
If incrementalism was justified in 2025, the ANPRM has not yet identified what has changed to justify sector-specific rulemaking now.
IV. Any Rule Should Target Disclosure Harms, Not Fee Structures
As set forth above, ICLE does not believe the current record supports proceeding to an NPRM under Section 18. The design observations that follow are offered in the alternative: Should the Commission develop a record satisfying Section 57a’s requirements for prevalence, unfairness or deception, and cost-benefit analysis, these principles should guide any rule design.
Before turning to those principles, ICLE acknowledges what the enforcement record does suggest. The checkout flows alleged in the Grubhub and Instacart complaints—where consumers allegedly assembled complete orders, selected delivery windows, and proceeded to payment screens before learning the full fee amount—may strategically exploit order-commitment dynamics to reduce price sensitivity. A consumer who has spent time building an order, selected a delivery window, and reached the payment screen has invested effort. Abandoning the order and switching platforms at that point imposes real costs.
Where specific platforms structure checkout flows to reveal mandatory fees at the moment of maximum sunk-cost leverage, that conduct may harm affected consumers. Depending on the facts and circumstances, such conduct might give the Commission “reason to believe” that enforcement against those specific firms is warranted.
But evidence that particular firms used deceptive checkout flows is not evidence that the practice is prevalent across the heterogeneous food-delivery market. Section 57a(b)(3) requires prevalence, not possibility. To advance to an NPRM, the Commission must establish both the prevalence of the acts or practices the rule targets and the manner and context in which those practices are unfair or deceptive.
If the Commission ultimately develops that record, any rule should address the specific timing and labeling harm that the record supports—not food-delivery pricing more broadly. As discussed below, that means distinguishing fixed mandatory fees from contingent, order-specific charges; preserving useful itemized disclosures; and recognizing that food delivery differs structurally from ticketing, lodging, and other markets where a single total price is knowable at the outset.
The Commission should also evaluate whether the identified conduct is better addressed through targeted Section 5 deception enforcement, Commission-issued business guidance on fee-advertising practices it considers deceptive, or industrywide rulemaking.
A. Any Rule Should Target Fixed Mandatory Fees
The identifiable drip-pricing harm is the delayed disclosure of mandatory fees until after a consumer has invested time building an order, thereby distorting comparison shopping. One cited complaint described this internally as a “pricing shell game.”[28] The problem is therefore one of timing and labeling, not fee structure.
Xavier Gabaix and David Laibson’s “shrouded attributes” model explains how such conduct can arise even in competitive markets.[29] Firms may have incentives to obscure mandatory add-on charges when some consumers focus primarily on headline prices. The model also suggests that mandatory disclosure of shrouded add-on prices can improve consumer welfare.
That conclusion, however, depends on a critical assumption: the hidden charge must be a fixed, known amount that the firm could disclose but strategically withholds. That assumption may fit the mandatory service fees alleged in the FTC v. Grubhub Inc. complaint. It does not fit the variable, order-specific charges that make up much of food-delivery pricing and that genuinely cannot be calculated at the point of initial advertisement.
Not all late-revealed fees constitute drip pricing. Food delivery involves costs that often cannot be calculated until customer- and order-specific variables become known. Delivery fees may depend on the customer’s address, distance, or real-time traffic conditions. Small-order surcharges depend on the final cart total. Tip prompts necessarily arise later in the transaction flow. These fees are not withheld to exploit sunk-cost leverage; they are unknown until the relevant inputs exist. A rule treating delayed disclosure of such variable fees the same as the strategic concealment of fixed mandatory charges would punish pricing transparency rather than promote it.
If the Commission nevertheless concludes that drip-pricing harms are sufficiently frequent, severe, and durable to justify intervention, any rule should narrowly target the timing problem itself without regulating fee structures. Such a rule should distinguish between two categories:
- Mandatory fixed fees—charges that apply regardless of order composition, whose amounts are known in advance and whose delayed disclosure may exploit sunk-cost dynamics without producing offsetting procompetitive benefits.
- Contingent variable fees—charges that vary based on factors such as address, cart size, time of day, or driver availability and cannot be disclosed as dollar amounts before the relevant inputs exist. For those fees, the Commission could require upfront disclosure that additional charges may apply, followed by clear disclosure of the amount once the pricing system can calculate it and, in all events, before purchase.
A blanket mandate to disclose all fees upfront could force platforms to display hypothetical estimates or adopt inefficient pricing structures, to the detriment of some consumers. By contrast, an amorphous timing standard—with some fees disclosed upfront and others disclosed only after the order has been finalized—could produce the very confusion the rule seeks to address.
B. Itemized Disclosure May Better Serve Consumers
A platform that displays “Subtotal: $22.00 + Delivery fee: $3.99 + Service fee: $2.50 = Estimated total: $28.49” before order placement provides complete and timely pricing information. That is not drip pricing. Indeed, this type of itemized disclosure may convey more useful information than a single blended “total price,” because it allows consumers to identify which charges they may be able to avoid—for example, by ordering from a closer restaurant to reduce the delivery fee or increasing the order size to avoid a small-order surcharge. Itemization also helps consumers understand the nature, purpose, and recipient of each charge. See Questions 42, 44.
That distinction tracks the framework ICLE urged in the rental-fee ANPRM: separate disclosure timing from the number of line items, and distinguish between optional or contingent services and charges every consumer must pay.[30] In the food-delivery context, the same principle suggests that mandatory baseline charges should be disclosed early, while truly optional or contingent charges may remain itemized so long as their triggering conditions are clear.
The FTC’s Bureau of Economics has likewise cautioned that disclosures containing “too much, irrelevant, or unnecessary information can make it difficult, time-consuming, and frustrating for consumers to understand what is being conveyed and sort the important points from the minor detail. Such disclosures may induce consumers to ignore the information completely because it is simply too much trouble.”[31] That concern applies directly here.
A delivery platform that collapses all variable fees into a single figure—including, e.g., delivery charges, percentage-based service fees, potential small-order surcharges, and tip solicitations—must either incorporate worst-case assumptions for each variable or present a broad pricing range. The former approach risks overstating costs for many consumers; the latter risks conveying little useful information at all. Either outcome could train consumers to disregard the disclosed figure as unreliable, producing precisely the disclosure-avoidance dynamic FTC staff warned against.
There may well be an optimal degree of fee-disclosure granularity between a single opaque total and a line-by-line accounting of every cost component. The current record, however, does not identify that point. Until the Commission develops empirical evidence regarding how consumers actually process itemized fee disclosures in the food-delivery context—evidence the ANPRM does not yet provide—any prescriptive disclosure-format rule risks mandating a level of granularity that is either too coarse or too fine to serve consumers effectively.
C. Food Delivery Requires Different Disclosure Rules
Food delivery differs fundamentally from the sectors covered by the Commission’s existing Unfair or Deceptive Fees Rule, including live-event ticketing, short-term lodging, and rental housing. In those markets, the total price is generally knowable before the consumer invests time comparison shopping. A hotel room carries a fixed nightly rate plus resort fees; a concert ticket has a fixed face value plus service charges. In both cases, the seller can calculate and display a single all-in figure at the point of initial advertisement.
Food delivery pricing operates differently. Many food-delivery charges are inherently variable and depend on order-specific circumstances. For example:
- Delivery fees vary based on distance, traffic conditions, and time of day.
- Service fees may be calculated as a percentage of the order subtotal.
- Small-order fees apply only when the cart total falls below a threshold amount.
- Surge fees fluctuate with real-time driver availability and consumer demand.
- Priority fees apply only if the consumer selects expedited delivery.
- Bag fees and regulatory-response fees vary by jurisdiction and item type.
A mandatory single “total price” is meaningful only if the consumer’s actual circumstances match the assumptions embedded in that figure. In many cases, they will not. A consumer with a $30 budget comparing restaurants cannot meaningfully rely on a “total price” calculated using hypothetical assumptions about order composition, delivery distance, or time of day.
ICLE made a similar point in the rental-fee context: a single all-in figure can distort comparison shopping when it incorporates charges triggered only by individualized circumstances. Food delivery amplifies that problem because the relevant variables may change with each transaction.[32]
The Commission’s existing rule already recognizes analogous administrability concerns. For live-event ticketing and short-term lodging, the Unfair or Deceptive Fees Rule excludes “shipping charges” from the total-price requirement.[33] See 16 C.F.R. pt. 464. The rule defines shipping charges as amounts reasonably reflecting the costs incurred to send physical goods to consumers. Delivery fees present a closely related problem because they often depend on address, distance, timing, and driver availability.
The Commission should therefore treat delivery charges similarly. Delivery fees should be excluded from any total-price requirement, with disclosure required once the consumer provides the information necessary to calculate the charge. See Question 35a.
Several states adopting total-price statutes have already reached comparable conclusions. Virginia’s Fair Food Delivery Act imposes disclosure requirements specific to food-delivery platforms.[34] Minnesota distinguishes between delivery platforms and food-service establishments.[35] California separately regulates third-party food-delivery platforms and treats them differently from restaurants, bars, and grocery stores.[36]
Those distinctions are not arbitrary. They reflect the same structural judgment advanced here: Food-delivery fees often cannot be meaningfully aggregated at the point of first advertisement because their amounts depend on consumer-specific choices and real-time logistical conditions that remain unknown until later in the ordering process. This is one reason why “all-in” pricing concepts used in hotels, ticketing, and broadband cannot readily be applied to food delivery.
A federal rule ignoring those differences and imposing a uniform total-price mandate would create substantial administrability problems. At best, the rule would require strained interpretations to remain workable. At worst, it would harm consumers by suppressing variable pricing signals that help platforms allocate delivery resources and serve higher-cost delivery zones.
V. Any Rule Must Account for Economic Costs and Tradeoffs
The ANPRM seeks comment on the costs and benefits of potential rule provisions. See Questions 27-31, 59-64. Before issuing any NPRM, the Commission should separately analyze not only the frequency, severity, and durability of the specific consumer harms it seeks to address, but also the economic consequences of any proposed rule design.
Four issues warrant distinct analysis: how compliance costs would flow through to consumers; how platform-based compliance standards could reduce burdens on small businesses; why cost-of-service fee requirements would exceed the Commission’s authority and distort supply; and how any federal rule would interact with state fee-transparency statutes already in effect.
The Commission should also assess the supply-side risks that distinguish sectorwide rulemaking from targeted enforcement. A case-by-case enforcement action can address specific deceptive conduct by specific firms. A rule, by contrast, may alter fee structures, pricing signals, and service availability across the entire food-delivery market, including in thin-margin and underserved areas.
The comments below do not recommend that the Commission proceed to a food-delivery NPRM. Rather, they respond to several of the ANPRM’s enumerated questions on the assumption that the FTC may later develop the relevant experience, evidence, and research findings needed to support a narrowly targeted rule.
A. Compliance Costs Will Affect Consumers and Small Platforms
Disclosure mandates can redirect behavior into channels the rule does not directly regulate, including pricing structure, service design, and investment in platform quality. Geoffrey Manne’s “hydraulic theory” of disclosure regulation explains how firms adapt along margins outside the rule’s formal scope.[37] Pass-through theory likewise establishes that the economic incidence of compliance costs does not depend on where the law formally places those costs; it depends on market conditions and pass-through rates.[38] The Commission therefore should treat platform compliance costs as potential consumer costs, rather than assume platforms will absorb them.
Those costs may be especially significant for smaller firms. Fixed compliance costs—including legal review, platform redesign, real-time fee-calculation systems, and compliance with differing state disclosure requirements—do not scale proportionally with transaction volume. The Commission’s current enforcement record involves only large national platforms capable of spreading such costs across billions of transactions. Any rule, by contrast, would apply equally to a regional delivery service processing only a small fraction of that volume.
Questions 59-62 therefore should distinguish among platform types and sizes. Average per-transaction compliance-cost estimates are likely to understate burdens on smaller operators while overstating them for larger firms.
B. Compliance Obligations Should Reflect Platform Structure
If the Commission proceeds with rulemaking, it must address the consequences of imposing compliance obligations primarily on platform operators rather than on each individual restaurant using those platforms. For example, a restaurant operating exclusively through a compliant third-party platform could be deemed compliant without separate disclosure obligations. This approach—similar to the Commission’s focus on software vendors in the rental-housing context—places technical compliance responsibilities on entities that already have the necessary engineering infrastructure, while protecting smaller businesses that lack dedicated compliance staff. See Questions 33, 54, 55.
This allocation, however, carries its own competitive risk. Deeming a restaurant compliant whenever it sells exclusively through a compliant third-party platform could give merchants that currently operate their own ordering and delivery channels a reason to abandon those channels and route sales through a third-party platform instead—not because the platform offers better service, but because routing through it discharges the merchant’s disclosure obligations. Smaller first-party operators, which face the steepest per-transaction compliance costs, would feel that pull most strongly. The Commission should therefore design any platform-level safe harbor so that it does not penalize merchants that choose to serve customers directly.
A rule imposing disclosure obligations only on third-party platforms—or effectively exempting first-party operators—would distort competition in the opposite direction. If compliance burdens fall only on third-party intermediaries, merchants would face artificial incentives to bypass those platforms and route sales through their own first-party channels, including through off-the-shelf ordering and delivery software that replicates platform functionality without the associated disclosure obligations. Channel choices would then reflect regulatory arbitrage rather than the relative quality, reach, or cost of the underlying services.
Any framework must therefore account for the competitive relationship between third-party platforms and merchant-operated first-party delivery services. The consumer-protection rationale for fee transparency does not depend on who operates the delivery service. A consumer encountering a hidden service fee on a restaurant’s own website faces the same potential harm as a consumer encountering one on a third-party app.
At the same time, the compliance-cost asymmetries discussed above are most acute for small first-party operators. A local restaurant or grocery store operating its own delivery website typically lacks the engineering infrastructure, legal staff, and transaction volume that allow national platforms to spread fixed compliance costs across billions of transactions.
If the Commission proceeds, it should therefore estimate not only aggregate compliance costs across the food-delivery sector, but also how those costs vary across different categories of providers. Based on those estimates, the Commission should consider proportionate compliance pathways for smaller first-party operators. Potential approaches could include simplified disclosure safe harbors for merchants below a specified transaction-volume threshold, or model disclosure templates satisfying the rule’s requirements without requiring custom legal or technical implementation.
Such an approach would preserve competitive neutrality between first-party and third-party delivery models while reducing the risk that prescriptive disclosure requirements disproportionately burden the market’s smallest participants. See Questions 33, 54, 55, 59-62.
C. Cost-Reflective Pricing Would Exceed the FTC’s Authority
Question 43 asks whether a rule should “require fees or charges to accurately reflect the actual cost of the goods or services covered by the fee or charge.” That question presents the most consequential design issue in the ANPRM because it would determine whether the Commission is proposing a disclosure rule or a form of price regulation. Section 18 authorizes the former, not the latter.
Cost-of-service ratemaking—requiring each fee component to correspond to allocated costs—is a traditional form of price regulation historically applied to public utilities under distinct statutory authority. It is not a disclosure requirement. A rule mandating cost-reflective pricing would not merely govern how platforms present fees; it would regulate the level and structure of those fees. That is price regulation under a disclosure label, and it exceeds what Section 5 unfairness or deception authority can support.
Economic theory further underscores the problem. William Baumol and David Bradford demonstrated that efficient pricing for multiproduct services does not require each fee component to equal marginal cost.[39] Efficient recovery of joint and common costs instead may require markups inversely related to demand elasticities, rather than uniform cost-reflective pricing.
That insight applies directly to food-delivery platforms. A platform’s “service fee” often funds a bundle of activities, including customer support, fraud prevention, insurance, and software maintenance. Those costs cannot be meaningfully allocated to individual transactions. Nor is there any principled reason to single out one component of a platform’s pricing structure for mandatory cost-reflective treatment while allowing all other business costs to remain embedded within menu prices.
The analogy to payment-card surcharge regulation is instructive. As Todd Zywicki, Geoffrey Manne, and Kristian Stout observed in that context: “There is no obvious reason why of all of the potential costs of doing business that could be disclosed to consumers, this one—and this one alone—is deemed to be particularly useful.”[40]
The same logic applies here. Menu prices, restaurant commission rates, software licensing fees, and other platform charges all incorporate cost allocations invisible to consumers. There is no principled basis for singling out service fees for mandatory cost-reflective disclosure while leaving other cost components bundled into prices—unless the objective is not transparency, but effective price control.
The Commission therefore should reject any cost-reflective pricing requirement in a final rule. At minimum, any NPRM should make clear that Question 43 does not reflect a proposal supported by the current record.
D. The Commission Should Account for Existing State Laws
At least five states have enacted fee-transparency statutes containing provisions specific to food-delivery platforms, and several others have introduced similar legislation.[41] A federal rule defining terms such as “mandatory fee,” “total price,” or “clear and conspicuous disclosure” differently from existing state standards would create overlapping compliance obligations whose costs ultimately flow through to consumers.
The Commission has already recognized the relevance of existing state regulation in analogous contexts. In the final Unfair or Deceptive Fees Rule, the Commission excluded long-term residential rentals in part because state and local laws already governed the challenged conduct.[42] That rationale applies with even greater force here, where multiple states have enacted food-delivery-specific fee-transparency provisions within the past 18 months.
Before issuing any NPRM, the Commission should therefore clarify whether a federal rule would preempt conflicting state requirements, establish a federal floor, or operate alongside divergent state standards. See Question 58b. Failing to resolve that issue in advance would predictably generate compliance costs, legal uncertainty, and litigation.
E. Uniform Disclosure Rules May Reduce Service Availability
There is a critical distinction between case-by-case enforcement and industrywide rulemaking. An enforcement action targets a specific platform’s allegedly deceptive practices. It constrains the bad actor without altering the pricing structures of compliant firms. A rule, by contrast, imposes uniform obligations across the entire sector. If those obligations effectively constrain how platforms structure variable fees—whether through mandatory all-in pricing, fee aggregation, or cost-reflective pricing requirements—the effects will fall most heavily on routes and delivery windows where variable fees are what make service economically viable.
Food-delivery fee structures are not arbitrary. Variable delivery fees reflect real logistical costs, including driver time, travel distance, congestion, weather, and fluctuating demand. Surge pricing during peak-demand periods or severe weather conditions sends signals that induce drivers to serve those routes and time windows. A rule compressing variable fees into flat charges, or discouraging itemized pricing through a mandatory single “total price,” would weaken those signals—not by formally prohibiting them, but by making transparent disclosure legally or operationally more difficult.
Although a disclosure rule is not formally a price cap, it may operate similarly in practice. A total-price mandate requiring platforms to display a single figure at the point of initial advertisement necessarily forces platforms to incorporate assumptions about variable fee components such as delivery distance, surge pricing, and small-order surcharges. In many cases, those assumptions will overstate actual costs for most consumers.
Platforms will then face competitive pressure to reduce the displayed total price. Under a total-price mandate, that pressure effectively translates into pressure to compress the variable-fee components contributing to the displayed figure. Over time, variable fees may migrate toward flat averages, reducing the pricing signals that reflect actual delivery costs. That is the mechanism through which a disclosure mandate can constrain fee structures and fee levels even without imposing a formal price cap.
The supply-side effects of revenue constraints in markets with heterogeneous operating costs are well documented. Rebecca Diamond, Tim McQuade, and Franklin Qian’s study of San Francisco’s rent-control expansion provides a useful empirical benchmark.[43] The study found that when revenue constraints bind in markets with location-specific cost variation, suppliers tend to exit the segments where those constraints are most binding. In the rent-control context, that dynamic contributed to condominium conversion and redevelopment of older units, producing a 15% reduction in rental supply concentrated in the affordable-housing segment the policy sought to protect.
That mechanism is not unique to housing. In any market with substantial cost variation across suppliers or service areas, uniform pricing constraints tend to reduce service in the highest-cost segments. In food delivery, those segments may include low-density markets, rural delivery zones, and late-night service windows—precisely the contexts in which delivery platforms may provide the only practical food-access option for consumers without transportation.
Targeted enforcement does not create this risk because it addresses specific deceptive practices by particular firms, rather than imposing uniform constraints on pricing structures across the market. Rulemaking does create that risk because it applies the same obligations to all operators, including firms serving thin-margin routes where variable pricing structures are necessary to sustain service.
Before issuing any NPRM, the Commission therefore should analyze these supply-side effects, including their geographic and demographic distributional consequences. See Questions 27, 59-64. A cost-benefit analysis that measures transparency gains for average consumers while ignoring potential service losses in underserved areas will overstate the rule’s net benefits and understate its distributional harms.
VI. Conclusion
ICLE supports targeted enforcement against drip pricing and material fee misrepresentations on food-delivery platforms where the Commission can establish deception or unfairness under Section 5 of the FTC Act. Existing law already reaches those practices.
At this stage, the proportionate response is continued Section 5 enforcement against documented violators, clear business guidance to the broader market, and coordination with state attorneys general where state law provides monetary remedies unavailable under the FTC Act. Consumer education also remains an underused, error-cost-minimizing first-line response. The Commission can help consumers understand that delivery fees vary, that “free delivery” may exclude service fees, and that tips are optional. See Question 65.
The Commission should also continue to develop the basis for any future rulemaking through more thorough—and public—analysis of the enforcement record, review of newly submitted data, literature reviews, and research by the FTC’s Bureau of Economics.
If the Commission later proceeds with rulemaking, any rule should be narrowly tailored. It should:
- Target the timing of disclosure rather than the format or number of line items;
- Treat delivery-related charges as structurally equivalent to the “shipping charges” already excluded from 16 C.F.R. part 464;
- Apply with competitive neutrality to both third-party platforms and merchant-operated first-party delivery services;
- Include platform-based compliance standards and small-entity safe harbors—including proportionate pathways for small first-party operators—as preconditions, not afterthoughts; and
- Reject cost-of-service pricing requirements that would exceed the Commission’s statutory authority. See Question 43.
Before issuing any NPRM, the Commission should make and support the prevalence determination Section 57a(b)(3) requires and build the economic record Section 57a(d) demands. That record should include systematic evidence on fee-disclosure practices across platform types and sizes; consumer-perception evidence specific to food delivery, including distinctions between first-time and repeat users; analysis of whether existing state laws already address the challenged conduct in jurisdictions where they apply; and supply-side analysis of how disclosure mandates may affect service availability.
That last point is critical. A disclosure mandate that effectively constrains variable fee structures can function as a de facto price cap, compressing the price signals that make high-cost delivery routes economically viable. The resulting service exits are likely to fall hardest on low-density, rural, and late-night delivery zones, where consumers have the fewest alternatives.
Building the record before committing to a regulatory approach will produce a better-designed rule and a more defensible one under post-Loper Bright judicial review.
[1] Rule on Unfair or Deceptive Fees in Online Food Delivery Services, 91 Fed. Reg. 20,381 (Apr. 16, 2026) (advance notice of proposed rulemaking) [hereinafter ANPRM].
[2] We recognize that the ANPRM does not expressly cite Section 12 of the FTC Act, 15 U.S.C. § 52, which prohibits false advertisements for food, drugs, devices, services, or cosmetics. Congress may have omitted Section 12 because violations of that provision are statutorily deemed unfair or deceptive acts or practices under Section 5. See 15 U.S.C. § 52(b). We note the provision here because Congress separately addressed false advertisements for food in Section 12.
[3] See Complaint ¶¶ 4, 7, 34–57, FTC v. Grubhub Inc., No. 1:24-cv-12923 (N.D. Ill. Dec. 17, 2024); Complaint ¶¶ 3, 14–34, FTC v. Maplebear Inc. d/b/a Instacart, No. 3:25-cv-10783 (N.D. Cal. Dec. 18, 2025); Complaint ¶¶ 6–9, 26–34, 50–52, In re Amazon.com, Inc., No. C-4746 (F.T.C. June 9, 2021); Complaint ¶¶ 13, 18, 102–07, 123–25, FTC v. Walmart Inc., No. 3:26-cv-01655 (N.D. Cal. Feb. 26, 2026).
[4] Id.
[5] See 15 U.S.C. § 45(a); Fed. Trade Comm’n, FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984).
[6] ANPRM, supra note 1, at 20,381 n.15.
[7] Complaint ¶ 192, FTC v. Grubhub Inc., No. 1:24-cv-12923 (N.D. Ill. Dec. 17, 2024).
[8] Complaint ¶¶ 48–49, In re Amazon.com, Inc., No. C-4746 (F.T.C. June 9, 2021) (alleging Amazon changed its practices “only after learning it was under investigation by the FTC”).
[9] Stipulated Order at 6-7, FTC v. Grubhub Inc., No. 1:24-cv-12923 (N.D. Ill. Dec. 31, 2024).
[10] Stipulated Order, FTC v. Maplebear Inc. d/b/a Instacart, No. 3:25-cv-10783 (N.D. Cal. Jan. 13, 2026).
[11] Decision and Order, In re Amazon.com, Inc., No. C-4746 (F.T.C. June 9, 2021); Stipulated Order, FTC v. Walmart Inc., No. 3:26-cv-01655 (N.D. Cal. Mar. 3, 2026).
[12] Fed. Trade Comm’n, Press Release, FTC Sends Warning Letters to 13 Property Management Software Providers Nationwide (Dec. 9, 2025).
[13] AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341, 1344 (2021).
[14] Id. at 1352.
[15] Fed. Trade Comm’n, Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act, Commission File No. P221202 (Nov. 10, 2022).
[16] See, e.g., Dissenting Statement of Commissioner Christine S. Wilson Regarding the Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act, Commission File No. P221202 (Nov. 10, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/P221202Section5PolicyWilsonDissentStmt.pdf. Commissioner Christine Wilson criticized the 2022 Policy Statement as rejecting precedent, the rule of reason, and the consumer-welfare standard, while asserting that “the Commission has the authority summarily to condemn essentially any business conduct it finds distasteful.” Id.; see also, e.g., Daniel J. Gilman & Gus Hurwitz, The FTC’s UMC Policy Statement: Untethered from Consumer Welfare and the Rule of Reason, Int’l Ctr. for L. & Econ. (Nov. 16, 2022), https://laweconcenter.org/resources/the-ftcs-umc-policy-statement-untethered-from-consumer-welfare-and-the-rule-of-reason.
[17] Eric Fruits & Daniel J. Gilman, ICLE Comments to the FTC on Unfair or Deceptive Rental Housing Fee Practices, Project No. R207011, at 4–5 (Apr. 9, 2026) (discussing Colorado/Greystar co-enforcement and state-law monetary remedies), attached as Appendix A.
[18] 15 U.S.C. § 57a(b)(2)–(3), (d).
[19] Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024).
[20] ANPRM, supra note 1, at 20,381 (citing CapitalOne Shopping, Online Grocery Shopping Statistics (Dec. 11, 2025)).
[21] The ANPRM reports that “about one third of American adults (and more than half of those under 45) now say they order delivery from restaurants at least once a week.” ANPRM, supra note 1, at 20,381.
[22] Complaint ¶ 14, FTC v. Grubhub Inc., No. 1:24-cv-12923 (N.D. Ill. Dec. 17, 2024).
[23] Complaint ¶ 27, FTC v. Maplebear Inc. d/b/a Instacart, No. 3:25-cv-10783 (N.D. Cal. Dec. 18, 2025).
[24] Todd J. Zywicki, Geoffrey A. Manne & Kristian Stout, Behavioral Law & Economics Goes to Court: The Fundamental Flaws in the Behavioral Economics Arguments Against No-Surcharge Laws, 82 Mo. L. Rev. 769, 840 (2017).
[25] Alexander Rasch, Miriam Thöne & Tobias Wenzel, Drip Pricing and Its Regulation: Experimental Evidence, 176 J. Econ. Behav. & Org. 353 (2020); Shelle Santana, Steven K. Dallas & Vicki G. Morwitz, Consumer Reactions to Drip Pricing, 39 Mktg. Sci. 188 (2020).
[26] Zywicki, Manne & Stout, supra note 24, at 784 (“This uniformly underwhelming track record of BLE in attempting to convert supposed anomalies found in economics lab experiments into real-world realities should give courts serious pause before following academia into the faddish regulatory proposals offered by BLE academics.”).
[27] Statement of Basis and Purpose, Rule on Unfair or Deceptive Fees, 90 Fed. Reg. 2,089, 2,119 (2025).
[28] Complaint ¶ 49, FTC v. Grubhub Inc., No. 1:24-cv-12923 (N.D. Ill. Dec. 17, 2024) (quoting an internal Grubhub executive communication describing the company’s fee practices as a “pricing shell game”).
[29] Xavier Gabaix & David Laibson, Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets, 121 Q.J. Econ. 505 (2006).
[30] Fruits & Gilman, supra note 17, at 6-7.
[31] James M. Lacko & Janis K. Pappalardo, Fed. Trade Comm’n Bureau of Econ., Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms 128 (June 2007).
[32] Fruits & Gilman, supra note 17, at 8-9.
[33] 16 C.F.R. § 464.1 (2026) (defining “shipping charges” and excluding them from the definition of “total price”).
[34] Va. Code Ann. § 59.1-586 et seq. (2025).
[35] Minn. Stat. § 325D.44, subd. 1a(c), 1(a)(h) (2025).
[36] Cal. Civ. Code § 1770(a)(29)(D)(i)–(iv) (2026); Cal. Bus. & Prof. Code § 22598 et seq. (2026).
[37] See Geoffrey A. Manne, The Hydraulic Theory of Disclosure Regulation and Other Costs of Disclosure, 58 Ala. L. Rev. 473 (2007) (arguing that disclosure regulation can redirect behavior toward dimensions not subject to disclosure).
[38] See E. Glen Weyl & Michal Fabinger, Pass-Through as an Economic Tool: Principles of Incidence Under Imperfect Competition, 121 J. Pol. Econ. 528, 533, 535 (2013).
[39] William J. Baumol & David F. Bradford, Optimal Departures from Marginal Cost Pricing, 60 Am. Econ. Rev. 265, 267 (1970).
[40] Zywicki, Manne & Stout, supra note 24, at 828.
[41] Cal. Civ. Code § 1770(a)(29) (2026); Colo. Rev. Stat. § 6-1-737 (2026); 940 Mass. Code Regs. § 38.00 et seq. (2025); Minn. Stat. § 325D.44 et seq. (2025); Va. Code Ann. § 59.1-607 et seq. (2025).
[42] See Jay Harris, FTC Launches Anticipated Rulemaking on Rental Housing Fee Practices, Hudson Cook (Mar. 13, 2026); Fruits & Gilman, supra note 17, at 12.
[43] Rebecca Diamond, Tim McQuade & Franklin Qian, The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco, 109 Am. Econ. Rev. 3365, 3369, 3393 (2019).