In April last year, My Business exposed complaints from an Australian business that its reputation was being tarnished by the delivery giant’s drivers, and that its contract placed an unfair burden on food providers by demanding they foot half the bill of any refund to consumers, regardless of which company was at fault.
The latter prompted concerns about a potential breach of rules around unfair contract terms.
At the time, My Business contacted the ACCC about the issue, but it declined to comment on specific cases. But a fortnight later, the ACCC announced that it would be looking into Uber Eats and its contracts, and a formal investigation ensued.
That investigation has now led to a commitment by Uber Eats to change the terms of its contracts with restaurants and food providers.
“From at least 2016, Uber Eats’ contract terms made restaurants responsible for the delivery of meal orders, in circumstances where they had no control over that delivery process once the food left their restaurant,” the ACCC said in a statement on Wednesday (17 July).
“Uber Eats’ contract terms give it the right to refund consumers and deduct that amount from the restaurant even when the problem with the meal may not have been the fault of the restaurant.”
ACCC chair Rod Sims noted that Uber Eats has now committed to changing its contract terms, noting they had made “restaurants responsible and financially liable for elements outside of their control”.
“We consider these terms to be unfair, because they appear to cause a significant imbalance between restaurants and Uber Eats; the terms were not reasonably necessary to protect Uber Eats and could cause detriment to restaurants,” he said.
According to the competition regulator, the contracts will be amended to clarify that restaurants and food providers are only responsible for matters under their direct control, such as missing or incorrect food orders.
It said that Uber Eats will also remove the statement in its contracts that stipulates it does not provide logistics services.
“Because clearly in our view, they do,” Mr Sims said.
He added that the ACCC will “continue to monitor Uber Eats’ conduct” to ensure unfair provisions are not imposed on smaller businesses, nor are they held responsible for its own service provisions.
“Ensuring small businesses aren’t subject to unfair contract terms by larger businesses is one of our top priorities,” he said.
“Business are warned that if they include unfair contract terms in their contracts, they will risk close scrutiny from the ACCC.”
Mr Sims again called for laws prohibiting unfair contract terms being used against SMEs to be strengthened, to include penalties against corporate Australia for non-compliance.
The current provisions only stipulate that terms can be declared unfair and voided by a court ruling, and that it is not illegal for unfair provisions to be included in contracts, nor are there any penalties attached.
“We have called for legislative changes so the ACCC can seek penalties and compensation for small businesses where large businesses impose unfair terms,” Mr Sims said.
“We welcome the government’s commitment in March this year to consult on options to strengthen unfair contract term protections for small business.”