New York State moves against services that scalp restaurant reservations

ALBANY — New York Gov. Kathy Hochul approved legislation on Thursday to help end "black market" restaurant reservation scalping services by banning third-party applications from making reservations without the consent of the business.

Some of these services take all the reserved spots using artificial intelligence bots and then sell the reservations without the knowledge of the restaurant. Customers, as a result, either decide not to dine at the restaurant because of the reservation cost, or pay an upfront fee before even going to the restaurant, according to a news release announcing the bill signing.

And restaurants can end up losing business due to no-shows and double-booked reservations, lawmakers and restaurant groups said. 

The law, which takes effect in mid-February, aims to ends the practice by requiring the services to get consent from the restaurant before marketing or making seating reservations. Violators face civil penalties of up to $1,000 per violation, which accrue daily. Restaurants have the right to seek restitution under the law.

"We’re putting an end to the predatory black market for restaurant reservations — protecting consumers and businesses, and giving everyone a chance to get a seat at the dinner table," Hochul said in the statement. "New York is home to some of the best restaurants in the world, and whether you’re returning to your favorite local spot or trying out the latest in fine dining, you deserve a fair system."

Protections

The legislation aims to protect both restaurant owners and their customers, said State Sen. Nathalia Fernandez (D-Bronx), who sponsored the legislation. "This law targets unauthorized resellers who cause chaos for restaurants with last-minute cancellations and no-shows, leaving tables empty and hardworking staff without tips," she said in a statement.

There also have been numerous reports of instances where the apps double book the reservation, forcing customers to be turned away without any way to recoup their reservation fee, according to the legislative language.

Assemb. Alex Bores (D-Manhattan), who sponsored the bill in the Assembly, said the law also will help lower the cost of going out. "In a time where cost of living is front of mind, this leech industry of reservation-stealing has had negative effects on small businesses, waitstaff, and consumers alike," he said in a statement.

The passage of the law was applauded by restaurant and hospitality organizations, who say it will help with the cascading impact of these black market services.

"Food and beverage orders, employee schedules, and many other aspects of a restaurant rely on accurately predicting how many customers will show on a given night. These ‘bots’ have wreaked havoc on operations," Melissa Fleischut, president and CEO of the New York State Restaurant Association, said in a statement.

Reservation scalping deprives businesses and workers of money needed when seats don’t sell and tables go empty, Andrew Rigie, executive director of the New York City Hospitality Alliance, said in a statement. "Reservations are not a hustle for unauthorized third parties to sell for profit," he said.