UberEats forced to amend restaurant contracts after ACCC investigation

Pressure is building on the Coalition government to outlaw unfair contract terms after gig economy giant Uber today escaped an ACCC investigation with a slap on the wrist.

The company’s meal arm UberEats has been forced to amend its restaurant contracts after the competition watchdog alleged it left small business partners holding the bag for refunds they had no control over.

Under the contracts, Uber had the right to charge restaurants for customer refunds, even when problems with meals weren’t their fault.

This could have included instances where delivery drivers spilled, or even stole food, from customer orders.

“We consider these terms to be unfair because they appear to cause a significant imbalance between restaurants and UberEats,” ACCC chair Rod Sims said in a statement circulated on Wednesday.

“The terms were not reasonably necessary to protect UberEats and could cause detriment to restaurants.”

Under the amended terms, restaurants will only be responsible for refunds within their control, such as incorrect food items in orders.

An appeal option will also be written in, obligating Uber to review refunds at the request of restaurants.

In a statement, UberEats regional general manager Jodie Auster said the contract changes will come into effect from August.

“We’ll be introducing changes to our agreements with restaurant partners that are designed to be more clear, improve transparency and better reflect the way we operate in practice,” 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.”

The development is a clear win for independent restaurants, which due to customer trends often feel forced to join meal delivery platforms such as UberEats and Deliveroo to generate new business.

Pressure builds on government

But while Uber has amended the allegedly unfair terms, the company will escape without having to pay any penalties.

That’s because the Coalition government has dragged its feet on making unfair contract terms illegal, preventing the ACCC from prosecuting companies for financial penalties.

Under current laws, the ACCC can seek court approval to have unfair contract terms stricken, but cannot pursue penalties.

The ACCC and small business ombudsman Kate Carnell have been urging government to outlaw the terms for more than a year, but so far the Coalition has only committed to a regulatory impact process to consider strengthening the law.

Speaking to SmartCompany on Wednesday morning, Carnell said there had already been adequate consultation, urging the government to get on with the job.

“I don’t think you need any more consultation,” she says.

Carnell says small businesses shouldn’t have to deal with “take it or leave it contracts” with unfair clauses.

“These small businesses weren’t paid by UberEats even though when the food left their premises it was fine,” she says.

Carnell says she initially raised the possibility of unfair contract terms within Uber’s agreements and suspects other meal delivery platforms are also using unfair terms.

Last month SmartCompany reported allegations Menulog was employing unfair contract terms in dealings with its own partners.

On Wednesday, Sims also reiterated his longstanding calls for legislative reform.

“We have called for legislative changes so the ACCC can seek penalties and compensation for small businesses where large businesses impose unfair terms,” he said.

The federal opposition supports outlawing unfair contract terms, setting up an easy passage of legislative reform through the federal parliament.

Labor MP Andrew Leigh said UberEats is just one example of a big firm using its market power to inflict unfair contract terms on small businesses.

“While it’s pleasing to see the ACCC investigation has led to a good result in this instance, it’s disappointing that the Coalition is still ignoring the ACCC’s calls to penalise big companies,” he tells SmartCompany.

Uber is not the first company to face ACCC scrutiny over unfair contract terms (UCT). Corporate giants such as Visy Paper have also been forced to change their contracts since current UCT laws came into effect back in 2016.

The Treasurer has been contacted for comment.

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