Ever felt a bit say, ripped off by a delivery-app order? A recent class-action lawsuit filed in New York claims companies like Bay Area-based Uber Eats and Postmates have “monopoly power,” unfairly charging diners inflated amounts for meals that might otherwise be cheaper.
Two evenings ago, cocooned inside my Mission District dwelling, I ordered a Diet Coke and a modestly portioned taco salad from a nearby taqueria via Uber Eats. That order (sans tip) came to $17.97; a third of that charge was solely for “delivery” and “service” fees.
Per Eater SF, a proposed lawsuit that was filed Monday in the U.S. District Court for the Southern District of New York by a Manhattan law firm suggests popular food delivery apps are charging customers and restaurants fees that “are shocking when one considers how little value [they] provide to restaurants and consumers.”
The case, which was filed on the account of three New Yorkers, takes issue with the high commission fees these third-party services not only charge restaurants — in some cases as much as 30 or 40 percent of each order — but the charges they impose on diners, helping to artificially inflate menu prices in the "Meal Delivery Market" by means of "anticompetitive conduct."
All of these delivery app-related expenses are particularly nauseating when placed side-by-side with the benefits other companies offer customers for proportionately smaller upfront costs.
“[Mobile delivery service companies’] monopoly power in a Meal Delivery Market is reflected by their fees, which range from 13.5%–40% of revenues, even though the average restaurant’s profits range from 3%–9% of revenues,” reads the complaint, before proceeding into a further damning contrast.
“[Mobile delivery service companies’] fees are shocking when one considers how little value [Mobile delivery service companies] provide to restaurants and consumers contrast to platforms like AmericanExpress—which earns its 3.5% fees by offering consumers special products, experiences, benefits, exclusive membership services, and loyalty programs, [these companies] merely offer a list of local restaurants that can easily be found on Google or Yelp for free.”
One critical issue in the suit revolves around the “No Price Competition Clause” (NPCC), a condition which requires restaurants to keep menu pricing the same across the board if they wish to use the delivery services offered by the companies. Dishes priced at partnered restaurants are mirrored on these apps… despite the fact that none of those physical locations are open to dine-in experiences amid the pandemic.
In a nutshell, these eateries can’t change menu prices to accommodate the current crisis, help bolster sales, and offer Americans a slice of normalcy: “Plaintiffs bring this claim for relief on behalf of all Americans who would still to enjoy a nice dinner out with their family before defendants make that impossible.”
The suit hopes to also create two classes for affected parties:
(i) All persons or entities in the United States who, from April 14, 2016, until the anticompetitive effects of Defendants’ unlawful conduct cease, purchased meals directly from any restaurant that was contemporaneously contracted with the Delivery Apps (the “Direct Class”).
(ii) All persons or entities in the United States who purchased Dine-In meals from any restaurant that was contracted with the Delivery Apps at any time from April 14, 2016, until the anticompetitive effects of Defendants’ unlawful conduct cease (the “Dine-In Class”).
The two above mentioned classes have yet to be certified by the court — however if they at some point are, it would mean each class could be entitled to certain compensations — and the spokespeople and plaintiffs representing the named companies are keeping quiet for now.
Image: Unsplash via Charles Deluvio