Why do Mystery Shopping Companies want Independent Contractors instead of regular employees? 

Before you can sign up for mystery shops you will likely be asked to agree to, sign, or accept an Independent Contractor Agreement, an ICA.  Many shoppers in the frenzy to sign up for as many mystery shopping companies as possible may not take the time to read these varying agreements, analyze them or even print/save a copy for future reference.  These ICAs can be wide ranging and enforced through different state governments, so the stakes are high for independent contractors such as mystery shoppers.

NOLO.com, a leading online free legal advise website states "...employers have to pay additional expenses for employees, including payroll taxes, insurance premiums, employee benefits, and more.  When you hire ICs instead of employees, you also have reduced exposure to some types of lawsuits, such as those alleging job discrimination or wrongful termination."
  "Most importantly for many firms, ICs provide a level of flexibility that can't be obtained with employees. You can pay an IC to accomplish only a specific task, allowing your business to get specialized expertise for a short period -- without having to pay for training." NOLO.com

Why is it Beneficial to be an IC?
Mystery shopping companies need Independent Contractors to complete their jobs.  You provide the means of production.  However, that “you” is plural.  You are competing with 25,000 other certified shoppers according to the MSPA; “The MSPA estimates there are approximately 1.5 million mystery shoppers the United States and 250,000 internationally. Currently, there are more than 23,000 Silver certified shoppers and more than 2,000 Gold certified shoppers” (25,000 Have Earned Mystery Shopping Certification 1/2005).

As an IC you typically work out of your home and necessarily incur tax deductions from such a practice. By meeting the government’s guidelines for IC you are entitled to certain claims.  It is not only to the company’s advantage to keep you an IC instead of an employee.  If you are simply an employee many of the tax benefits and flexibility will be removed from your work.

All monies earned are taxable.  Even if you did not earn the magic $600 amount to generate a 1099 form, you still need to report your income.  
I – R – S.

When a mystery shopping company provides a shopper with too much training it may turn that shopper into an employee in the eyes of the IRS.  For the most part ICs are considered experts; this is the reason for the mystery shopping companies to look at external benchmarks such as MSPA , NARMS or NCPMS certifications.  These do not directly benefit the IC except to gain access to the work, many mystery shoppers will report they are not entirely necessary to start working.  Generally these organizations insulate the mystery shopping company as an added means of proof of independent status.  If the mystery shopping companies provide the training exclusively themselves, if they control the way an IC does the job, they run the financial risk of turning that IC into an employee. 

As a mystery shopper your status as an IC entitles the mystery shopping company to ownership of any work you produce.  Your narrative becomes their property. Copyright transfers to the mystery shop provider and can then be edited an presented to the client as the mystery shopping company’s work product.  This means even if you save the narrative you cannot use it again legally, it simply is no longer yours.

 You are legally bound by the ICA, but also the company is bound by it.  Even if you talk to the scheduler in person, even if your cousin dated her nephew’s neighbor and you are good friends, if it is not in writing it might not happen.  Written contracts are enforceable, agreements in voice are not.  Unless it is in black in white in your ICA do not agree to it, believe it or count on it until someone from the mystery shopping company sends you a copy in writing.  Meaning that phone conversation with the company scheduler about that bonus should be in writing before you do the shop.  Such written terms can be counted as an addendum to the ICA that a shopper has with that particular company.

Method/Time of Payment – The time frame in which you will be paid should be clear.  This is the first place to look for this information, not Volition.  This is what the company has to honor.

Trade Secrets/Proprietary Information/Non Compete - A non compete agreement applies only to one specific aspect of an employment relationship — the confidential information related to your business.  agreements are difficult to enforce and are not looked favorably upon by many states' courts because they restrict an individual's choice of employment  State Courts enforce these agreements only if the time and (geographic) scope is reasonable.  You could move to Utah and start another mystery shopping company, but not in this state, you can work for a competing  mystery shopping company, but only after one year has passed.  The courts generally look for adherence across the board and if some ICs are not held to this you may be able to  breakyournoncompete.com.

Law of Governance - Which state court will settle any disputes?

Right to Terminate Working Relationship - This appears to be different with MSing than other contracted services; generally ICA for mystery shopping can terminate at any time without cause.  So you can be deactivated for speaking up on the forums. 

When one industry holds a different standard from others this should signify something  we should all watch.

"If you have a right to fire a worker at any time for any reason or for no reason at all, government auditors may conclude that you have the right to control that worker. The ever-present threat of dismissal must inevitably cause a worker to follow your instructions and otherwise do your bidding. This type of control is not present when both you and the IC know you can't arbitrarily terminate the IC's services without risking a lawsuit for breach of contract." www.tgic.com This is one of the 20 factors in a litmus test the IRS uses to distinguish ICs from employees.

Training, the requirement to follow specific instructions and the right to terminate at any time leave mystery shopping companies vulnerable to be construed as employers. 

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