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Uber Eats accused of unfair contracts against SMEs

Adam Zuchetti
Adam Zuchetti
12 April 2018 3 minute readShare
Business, bully, gloves

Food delivery service Uber Eats has found itself the subject of a bitter public complaint by a disgruntled business that alleged below par service. Yet a bigger concern pertains to Uber Eats’ contract terms.

In the lengthy post made on Facebook on 10 April 2018, Burgers by Josh – which operates three outlets in Sydney and Wollongong – claimed that “our google [sic] reviews have been tarnished by unhappy customers who’s [sic] issue is with [Uber Eats] delivery drivers”.

The post said that Uber Eats drivers are untrained in food handling or basic customer service, and this is reflecting badly on businesses – usually small restaurant operators – using the service.

“We contacted uber [sic] simply to be told they can’t do anything about it and to give a bad review to drivers,” Burgers by Josh said.

“So we will no longer be partnering with uber eats [sic] and are looking into removing our Contract with them.

“We will however be on Deliveroo as its [sic] a much better service for customer and business alike.”

The post included repeated apologies to customers who “have had a bad experience with Uber Eats”.

However, Uber Eats disputed Burgers by Josh’s claims, and said that it had not received any complaint from the business.

“We actually had not received any formal complaint or any contact from that restaurant, so it was news to us when we saw what that Facebook post was talking about,” an Uber Eats spokesperson told My Business.

The spokesperson said they have since made contact with Burgers by Josh, and are working towards addressing the concerns raised.

“They do now understand a lot of the issues could have been resolved if they had come to us first,” the spokesperson said.

“It’s in our best interest to make being on Uber Eats viable for the restaurant partners. We don’t exist without restaurants being on our platform, so obviously we don’t want them to be unhappy.”

While the breakdown may have been a simple miscommunication in terms of where the restaurant should have directed its initial concerns before they built up to such a fiery situation, Burgers by Josh also raised a potentially more troublesome issue for Uber Eats, in the form of possible unfair contract terms.

As of 12 November 2016, new laws were introduced to protect small businesses from entering into unfair contracts or clauses imposed on them by larger entities. It applies to all contracts entered into on or since that date, new or renewed, where at least one party is a small business.

Among the definitions of what constitutes an unfair term is “potentially broad and unreasonable powers to protect themselves against loss or damage at the expense of the small business”.

Burgers by Josh claimed that restaurants using Uber Eats are required to foot the bill for 50 per cent of any refund issued to customers, regardless of who was at fault for the complaint.

“This overseas company is Un-Australian [sic] and exploiting small business, we must say NO,” it said.

Uber Eats confirmed to My Business that it had changed its policy, to move the initial cost burden of any refunds onto the restaurant rather than itself.

“The implementation here that has created some confusion is that, if you order your meal and a can of Coke from this particular restaurant and you receive your order but the can of Coke is not there, then that cost, that cost used to be on Uber, and now the expectation is that restaurants need to front up and pay for mistakes, which is quite a reasonable request,” the Uber Eats spokesperson said.

“They are welcome to dispute that, and we will work with them.”

When asked whether this policy applied more broadly and that a business would be refunded for the recompense paid to a consumer if Uber Eats investigated the issue and found the delivery component was at fault, the spokesperson replied “Yes, we would”.

Such a contract clause sits in murky water under the unfair contract rules, and could be subject to legal action to determine their validity.

“Terms that unfairly seek to shift liability from the contract provider to a small business are likely to raise unfair contract terms concerns, however it is ultimately for a court or tribunal, and not the ACCC, to determine whether such terms are unfair,” an ACCC spokesperson said.

While the ACCC would not comment on the specific circumstances of this scenario, it urged any business with concerns over contract terms to take action.

“If [a] small business thinks a contract term is unfair, in the first instance it should ask the provider to amend or remove the unfair term. If this is unsuccessful, a small business can:
• Contact the ACCC and make a report (or otherwise ASIC if it relates to a financial service or product); or
• Seek the assistance of the State’s Small Business Commissioner or ASBFEO."

It is not the first time Uber Eats as been called out for exploitative” behaviour, with a Sydney cafe telling News Corp in January this year that it would not accept orders through Uber Eats because of its fees are damaging profitability.

“Uber Eats is incredibly exploitative of small business AND drivers,” Petty Cash Cafe said in response to Uber Eats' 35 per cent margin demand.

My Business also reached out to Burgers by Josh for additional comment on the matter, but the business did not respond.

Uber Eats accused of unfair contracts against SMEs
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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