New York Curbs Scalping of Restaurant Reservations

Legislation aimed at the unauthorized sale of restaurant reservations, described as the first of its kind in the United States, takes effect in New York on February 17, 2025. Titled the Restaurant Reservation Anti-Piracy Act, the statute does not actually prohibit the sale or resale of restaurant reservations. Rather, it prohibits listing or selling reservations on a website or mobile application by persons who do not have a written agreement with the restaurant to include its reservations. Thus, restaurants and authorized booking sites remain free to charge for reservations as they see fit.

In comments made when signing the legislation, New York Governor Kathy Hochul stated that it would put an end to the "predatory black market for restaurant reservations." One of the act's legislative sponsors described businesses that engage in the now-prohibited conduct as a "leech industry of reservation-stealing."

The legislation was supported by New York's restaurant trade group, which stated that the practice was disruptive for its members by increasing the rate of no-shows. Apparently, this problem arose from the mass booking of reservations by bots operated by listing companies that were unable to sell all the reservations they had made. The mass booking of reservations would also create artificial scarcity, thus driving up the prices at which the listing companies could resell the reservations.

Not surprisingly, the founder of one company impacted by the law took a different view. Stating that his website charged an average of $100 per reservation, he argued that offering coveted reservations at modest prices democratized the system by making reservations available to people who lacked the connections to get them directly.

The statute provides for civil penalties of up to $1,000 per violation per day, with each unauthorized restaurant listing being a separate violation. For example, a website that listed reservations for seven restaurants without the required agreements would be exposed to penalties of up to $7,000 per day. Proceedings to recover such penalties could be brought by the state attorney general or other authorized agencies.

Consumers who purchased an unauthorized reservation are empowered to sue for damages that may not exceed the fee collected by the reseller, plus attorneys' fees. Restaurants are also given the right to sue listing companies that offer or sell their reservations without authorization and may similarly collect damages and attorneys' fees.

The statute also includes a provision that prohibits and renders unenforceable agreements by restaurants to indemnify authorized reservation services for claims arising from the services' own actions.