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Technology innovations are making it simpler for restaurants to connect with their customers and offer convenient service, but new technologies also bring about policy issues that can be tricky to navigate. Brennan Duckett, director of technology and innovation policy at the National Restaurant Association, discusses some of the Association’s big wins from the past year in advocating for policies that benefit restaurant operators and looks ahead to the issues that will be on the docket in 2023.
What were some major legislative policies affecting technology and innovation in 2022?
There were two pieces of legislation introduced in Congress in 2022 that, if passed, would have had a major impact on our industry. Though the Credit Card Competition Act of 2022 (S. 4674/H.R. 8874) and the American Data Privacy Protection Act (H.R. 8152) didn’t pass in the 117th Congress, they still put restaurants and retail businesses on alert that Congress wants to address anti-competitive practices in the credit-card routing system as well as consumer privacy and data security standards. The legislation signals changes could be forthcoming.
On the regulatory front, the Federal Reserve Board of Governors issued a final rule in 2022 creating positive change for restaurateurs and other business owners. Released in October, the regulation injects more competition into the debit-card transaction processing marketplace, giving merchants more debit-card payment routing options. The ultimate benefit is that it could reduce excessive swipe fees, one of restaurants’ highest expenses, just behind food and labor costs.
Looking ahead to 2023, what policy issues should restaurants have on their radar?
A new, divided government with a Republican-controlled House and Democrat-controlled Senate means passing federal legislation, particularly technology- and innovation-related policies and issues, could prove more difficult. That said, we expect the ADPPA to be introduced again.
The ADPPA would create a federal data-privacy framework empowering consumers with more control over their personal information and establishing legal requirements for businesses to protect and secure that personal data. However, provisions in the legislation regarding preemption of state laws and enforcement via private lawsuits would be harmful to restaurants, even forcing some to shutter through no fault of their own. That’s why we plan to continue advocating against it in its current form in 2023.
In contrast to the federal government, we expect the political landscape at the state level will remain very active in these issues. Over the last year, about 30 states introduced their own comprehensive data-privacy bills mirroring laws already passed in California and Virginia. The Association anticipates that more states will introduce data-privacy legislation in 2023. But a patchwork of state laws — each one different in its own way — isn’t ideal either. Varying state laws create uneven, confusing and costly regulatory standards.
When it comes to affecting policy, what were some of the Association’s big wins in 2022 and what do you predict will be a big focus in 2023?
Although the Association is now still opposed to the ADPPA, we successfully negotiated language around two key provisions — loyalty programs and third party liability — into the legislation. As a result, we helped preserve restaurants’ capacity to offer customer loyalty programs. Also, by establishing more robust statutory obligations for third parties and service providers, restaurants wouldn’t be held liable for potential violations of the law by their downstream business partners.
In addition, we pressed Congress and the Federal Reserve for nearly two years to act on swipe fees and barriers to competition in the debit- and credit-card transaction routing sector. Our efforts proved successful when the Federal Reserve this fall issued its final rule, including provisions we’d long advocated for.
Collection and utilization of customer data is increasingly important for restaurants as they tailor their menus and marketing messages to customers. How does the Federal Trade Commission’s proposed data security rule stand to make collecting data more difficult?
The FTC’s proposed rule on “data security and commercial surveillance” serves as a first step for the agency to potentially establish new regulations around data privacy and security. The proposal, containing about 100 questions, requests public feedback on how businesses collect, utilize, and protect consumers’ personal information.
The Association, along with our Restaurant Law Center, submitted comments to the FTC, noting how certain data-collection practices, such as loyalty and/or rewards programs, are designed to benefit the consumer. Restaurants and consumers should be free to voluntarily establish mutually beneficial, business-customer relationships. We’re proposing that the FTC defer rulemaking on this subject until Congress provides clarity and guidance to ensure a comprehensive federal framework.
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