UberEats to fix ‘unfair’ contracts
UberEats says it is changing its contracts with restaurants so they no longer shoulder the burden of refunds for dodgy deliveries.
The move comes after an investigation by the competition watchdog, which branded the contract terms "unfair" because the restaurants had no control over the delivery process once the food left their restaurant.
Under the contracts in place since 2016, UberEats had the right to refund customers and deduct that amount from the restaurant even when the problem with the meal may not have been the fault of the restaurant.
The ACCC said on Wednesday UberEats has agreed to amend the terms to clarify restaurants will only be responsible for matters within their control such as incorrect food items or incorrect and missing orders.
Under the amended terms, restaurants will also be able to dispute responsibility for any refunds to customers and UberEats will reasonably consider these disputes.
"We're still concerned about UberEats - we're going to keep a very close eye on them," said ACCC chair Rod Sims, who described it as an "excellent example" of why the law around unfair contract terms needed to be tightened up.
"The way the law works at the moment, we can take companies to court to get contract terms declared void if we can prove to the court that they are unfair. That's the threat we had here which forced the change. UberEats have made enough changes to address our main concerns."
But under Australian Consumer Law currently, a large business including or relying upon an unfair contract term against a smaller business is "not illegal in the first place" and penalties cannot be imposed for such conduct.
"You can see the problem here," Mr Sims said. "You can put clauses in your contract, then when we come knocking you just say, 'All right, we'll take them out and make some changes.' They shouldn't be there in the first place - these are outrageous clauses."
Mr Sims said it was an "absolute hole" in the law and he was "hopeful we're going to get change soon". In March this year the government committed to consult on options to strengthen unfair contract term protections for small business.
UberEats has also agreed to change a clause in its contract that required restaurants to "acknowledge and agree that Uber is a technology services provider" and that it does not "provide any delivery or logistics services".
Rather, the clause stated that the app allows restaurants to "connect with independent providers of delivery services" who "shall operate under cover of your retail license privileges and control, as your agent, and not employee".
The ACCC felt the clause was misleading, saying it was "concerned" by these terms "given UberEats' role in determining the pool of drivers available to restaurants, their payments, and providing facilities such as the consumer's address, map services and GPS tracking to assist the driver in delivering meals".
Mr Sims said in a media release the ACCC welcomed UberEats "agreeing to remove the statement in its contracts saying it does not provide logistics services, because clearly, in our view they do".
The refund terms were "unfair because they appear to cause a significant imbalance between restaurants and UberEats - the terms were not reasonably necessary to protect Uber Eats and could cause detriment to restaurants".
He added the ACCC would "continue to monitor UberEats' conduct to ensure restaurants are not unfairly held responsible for matters outside of their control and UberEats does not hold anyone else responsible for parts of the service it controls".
UberEats regional general manager Jodie Auster said the changes to the contracts would begin rolling out next month and would be completed by December. The company has committed not to enforce the terms that the ACCC considers to be unfair while these changes are completed.
Ms Auster said the changes were "designed to be more clear, improve transparency and better reflect the way we operate in practice". "We're pleased to have been able to engage constructively with the ACCC to resolve this matter," she said.
She said some of the key changes UberEats would be making included "providing more detailed information about our technology services, as well as greater clarity on how we handle complaints and process payments".
That includes "providing additional information about the limited circumstances when restaurants need to cover the cost of refunds, such as when there is an incorrect item or items are missing, reflecting the way we operate in practice".
It also means "setting out a more consistent and clear approach for varying and terminating agreements". "As the online food delivery industry evolves, restaurant partners using the UberEats app can attract new customers, increase earnings and grow their brand," she said.
"We place a lot of value on establishing long-term relationships with our restaurant partners and it's important that we provide a great partner experience - which includes giving them clear information about what to expect from us in a range of circumstances."
Earlier this month, the burger chef who helped spearhead UberEats' Sydney launch in 2016 by opening the country's first 'dark kitchen' accused the ride-sharing company of stabbing him in the back, leaving him broke and $730,000 in debt.
Tony Plunkett said UberEats - his only source of orders for the restaurant - would regularly make his store "go invisible" in the app at peak dinner times, decimating his sales, while at other times his delivery radius would be inexplicably restricted.
"We became too popular," Mr Plunkett said. "I was sucking too many drivers and riders into the store, so they shut us down. They would make us go invisible. If you go from 4km to 3km you lose about 60 per cent of your business."