Assembly Bill 578, signed into law last fall, requires third-party delivery platforms to issue full refunds to a customer’s original payment method when an order is missing, incorrect, or not delivered as promised. Refunds must now include the full cost of the food, plus taxes, fees, and tips, replacing the long-standing practice of issuing in-app credits. The law also mandates access to human customer support when automated systems fail and requires itemized receipts showing how charges are calculated.
Supporters of AB 578 argue the changes address years of consumer frustration with opaque pricing, expiring credits, and near-impossible customer service loops. Lawmakers backing the bill cited real-world examples of customers being left without food and without their money, sometimes for large orders, after delivery failures. Governor Gavin Newsom framed the measure as part of a broader effort to strengthen affordability and transparency protections across California’s economy.
But within San Diego’s restaurant community, the reaction has been more mixed.
While the law technically governs delivery platforms, not restaurants directly, operators say the practical burden often trickles downstream. Chargebacks, disputed orders, and refund investigations can still land on restaurants, especially in cases where platforms attempt to recoup losses or shift responsibility for alleged mistakes.
“One bad actor can claim an order was wrong or missing, get a full cash refund, and there’s very little stopping that from happening repeatedly,” said one San Diego restaurant owner who asked to remain anonymous. “We’re already losing 20 to 30 percent of every delivery order to platform fees. If this opens the door to more abuse, it’s not DoorDash or Uber Eats that feel it first, it’s the restaurant.”
Under AB 578, delivery platforms are allowed to investigate suspicious or fraudulent refund requests, but consumer advocates acknowledge enforcement and verification will largely be handled internally by the apps themselves. That gray area is what worries many operators, who say proving an order was correct after it leaves the kitchen is often impossible.
The law expands on California’s Fair Food Delivery Act of 2020, which capped delivery fees and required clearer disclosures around pricing and tipping. AB 578 goes further by explicitly requiring cash refunds rather than credits and by setting new expectations around customer service transparency. It also includes new rules for delivery workers, requiring clearer breakdowns of pay, tips, and bonuses, and prohibiting platforms from using tips to offset base pay.
The new law arrives amid growing national scrutiny of food delivery platforms’ algorithmic practices. Just days after AB 578 took effect, DoorDash found itself responding to a viral Reddit post alleging the existence of a hidden “desperation score” used to determine driver pay based on financial need. While the claims were unverified, they spread rapidly online and forced an unusually blunt public denial from DoorDash CEO Tony Xu, who called the allegations “appalling” and categorically denied that the company tracks driver desperation, suppresses base pay based on tipping behavior, or labels drivers as “human assets.”
DoorDash later published a detailed blog post rejecting the claims, but the episode underscored how little transparency exists around algorithm-driven decision-making in the gig economy. For restaurant owners and delivery workers alike, the controversy reinforced a growing concern that platforms operate as black boxes, and that new consumer protections like AB 578 may be only the beginning of broader regulatory efforts to rein in systems many believe quietly shift risk, cost, and accountability onto everyone except the platform itself.
For consumers, the changes are likely to feel like a win. For restaurants, the calculus is more complicated.
Delivery orders already come with higher food costs, additional labor, packaging expenses, and increased error rates compared to in-house dining. Many operators say they tolerate delivery only because opting out can mean losing visibility and customers in an app-driven dining economy.
“When a guest eats in-house, if something goes wrong we can fix it immediately,” the anonymous owner said. “With delivery, we lose control the second the bag leaves. This law assumes the system is clean and fair, but restaurants know that’s not always how it plays out.”
Industry analysts note that California’s move could become a bellwether nationally. If other states adopt similar laws, delivery platforms may standardize refund policies across markets rather than operate state-by-state systems. That could further reshape the economics of third-party delivery, potentially leading to higher fees, stricter refund scrutiny, or reduced restaurant participation.
For now, AB 578 shifts power decisively toward consumers, forcing platforms to absorb more immediate financial responsibility for failed deliveries. Whether that pressure stays with the apps, or flows downhill to restaurants already stretched thin, remains an open question.
As San Diego’s dining scene continues to navigate rising labor costs, inflation, and changing consumer habits, many operators say the law underscores a larger issue: delivery may no longer be a neutral convenience, but a structural risk that restaurants must constantly reassess.
For consumers, the changes are likely to feel like a win. For restaurants, the calculus is more complicated.
Delivery orders already come with higher food costs, additional labor, packaging expenses, and increased error rates compared to in-house dining. Many operators say they tolerate delivery only because opting out can mean losing visibility and customers in an app-driven dining economy.
“When a guest eats in-house, if something goes wrong we can fix it immediately,” the anonymous owner said. “With delivery, we lose control the second the bag leaves. This law assumes the system is clean and fair, but restaurants know that’s not always how it plays out.”
Industry analysts note that California’s move could become a bellwether nationally. If other states adopt similar laws, delivery platforms may standardize refund policies across markets rather than operate state-by-state systems. That could further reshape the economics of third-party delivery, potentially leading to higher fees, stricter refund scrutiny, or reduced restaurant participation.
For now, AB 578 shifts power decisively toward consumers, forcing platforms to absorb more immediate financial responsibility for failed deliveries. Whether that pressure stays with the apps, or flows downhill to restaurants already stretched thin, remains an open question.
As San Diego’s dining scene continues to navigate rising labor costs, inflation, and changing consumer habits, many operators say the law underscores a larger issue: delivery may no longer be a neutral convenience, but a structural risk that restaurants must constantly reassess.
Originally published on January 8, 2026.
