The pandemic changed many things about the day-to-day habits of consumers around the globe.
The sudden need to limit contact with the outside world was a boon for delivery services like Uber Eats (UBER) and Doordash (DASH).
But the business model for the service, which treats drivers as independent contractors instead of employees, has come under increasing scrutiny.
That pushback was most clear in California where Assembly Bill 5 was passed in 2019. The bill required ride-hail drivers and other "gig-economy" workers to be classified as employees.
However, Uber, Doordash, Lyft (LYFT), Instacart, and Postmates teamed up to push Proposition 22, which would classify their drivers as contractors instead of employees. The $205 million the group reportedly spent to get the proposition passed in November 2020 made Prop 22 the most expensive ballot measure in California's history.
But the legislation is currently in further litigation after the Alameda County Superior Court ruled in August 2021 that the ballot measure violates the California constitution.
Now, the federal government is also stepping in, adding more potential trouble for the industry's employment and business model.
FTC Regulates Food Delivery Services
The Federal Trade Commission recently issued a policy statement saying that the agency would "use its full authority" to protect gig workers from "unfair, deceptive, and anticompetitive practices.
The FTC cited a study that estimates that the gig economy will generate $455 billion in annual sales by 2023, but the agency doesn't want that growth to come at the cost of the exploitation of the workers that make the industry go.
"Companies frequently promote gig work as a flexible opportunity for people to set their own hours and work on their own terms. These companies often categorize their workers as independent contractors," the FTC statement said.
"Yet in practice these firms may tightly prescribe and control their workers' tasks in ways that run counter to the promise of independence and an alternative to traditional jobs."
DoorDash and Uber did not immediately return a request for comment.
Part of the issue with the working environment is that gig workers often don't have the information they need to know when work will be available, where they will have to perform it, or how they will be evaluated, according to the FTC.
The Commission also says that gig workers are increasingly being managed by algorithms that use extensive data collected from workers and consumers to "make important management decisions using undisclosed criteria."
Uber Eats Has a Poor Customer-Service Rating
Uber Eats scores 1.5 out of 5 on a popular customer-service-rating site based on nearly 18,000 reviews.
Uber Eats is not alone in providing less-than-perfect customer service. It has been a challenge for digital businesses in general, and Uber's issues are complicated by it not controlling either the restaurants or the drivers.
"Overall customer satisfaction in the United States continues to decline. It is now at a troublesome low, slipping 0.5% to 73.3 (out of 100) in the fourth quarter of 2021 – a level not seen since 2005," according to the national American Customer Satisfaction Index.
There's a reason for that, and a cure.
"During much of the 1990s, there was a sharp decline in customer satisfaction, but as businesses began to realize that customer loyalty was often contributing more to profits than increased market share, there was a shift toward a greater focus on customer satisfaction. Accordingly, ACSI increased sharply over many years," the ACSI said.
