Uber to pay US $20 million for misleading drivers

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kingdragonfly

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# 208021 23-Jan-2017 17:10

This is not an "I work for a taxi company, so I hate competition from Uber" thread.

New Zealand taxi companies consistently rate in the top 10 most expensive rates in the world, so competition would be good.

However Uber's well known for some nasty practices.

Clipped from CNN:

"Uber will pay US $20 million to settle a lawsuit with the Federal Trade Commission for misleading drivers about how much they could earn on the platform.

The FTC alleged that Uber made false, misleading or unsubstantiated claims about driver earnings and its vehicle financing program. According to the complaint, Uber claimed its drivers could earn a median income of more than $90,000 per year in New York and more than $74,000 in San Francisco. In reality, the FTC said, less than 10% of drivers earned that.

Regarding its vehicle leasing program, Uber has made 'unlimited mileage' claims, but the actual leases do impose limits. 'Uber has had no basis with which to make these claims,' according to the complaint.

The lawsuit alleges that Uber has collected 'significant revenue' from driver fares, as well as 'tens of millions of dollars' from drivers participating in its leasing program.

This is a win for drivers when it comes to more transparency from the company moving forward. Uber drivers -- considered to be contractors, not employees -- have long complained about the company's payment practices.

While Uber did not admit or deny that it engaged in these misleading practices, it has agreed to not misrepresent the potential earnings for drivers or its terms and conditions for leasing vehicles.

The $20 million will go toward repaying drivers affected across the country.

..."

http://money.cnn.com/2017/01/19/technology/uber-settles-driver-lawsuit/index.html

networkn

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# 1708198 23-Jan-2017 17:24

I am not Anti Uber, but they don't seem to be to "properly" setup. I think they had a great idea, some ideas on how to implement it, but no real idea how to manage it on a bigger scale. I am also of the opinion they don't share the "do no evil" ethos that some companies (try) to adhere to (yet).

It was almost inevitable to me they would be found to do something like this, however, I also believe they will learn their lesson, and a few more, find their place in the market and do their thing.

Honestly, I am more surprised there aren't stories of serial killers operating in an Uber cab :)

Once they factor in proper oversight, proper administration, compliance costs, etc, and pay their drivers a fair wage, I expect the price gap between them and taxi's will lessen.

chevrolux

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# 1708201 23-Jan-2017 17:29

2 people support this post

Quite honestly... as long as I can get from Wellington Airport to Johnsonville for $35 Uber can do what they want with their business. Probably the wrong attitude to have, but when the price is double that in a 'normal' taxi I feel like there are just some crazy margins being added in somewhere.

networkn

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# 1708204 23-Jan-2017 17:41

chevrolux:

Quite honestly... as long as I can get from Wellington Airport to Johnsonville for $35 Uber can do what they want with their business. Probably the wrong attitude to have, but when the price is double that in a 'normal' taxi I feel like there are just some crazy margins being added in somewhere.

Well yeah, I'd call you on your wrong attitude. Compliance, being a good corporate citizen, having proper things in place, it all costs money. Rising costs either reduces margins or impacts pricing.

sbiddle

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# 1708260 23-Jan-2017 19:41

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While I use Uber I find it a dilemma in that they're an evil company. The problem however in NZ is that none of the regular taxi companies are doing anything whatsoever to actually improve their products or services, something that really defies normal business practice when a competitor comes along and starts stealing your customers. While price is a major factor for many people it's not the only factor for me. When you've got the major taxi companies building terrible apps that are simply not functional and are stuck with a mind-set that they can rip people off with "electronic payment fees" (that just go back to Taxicharge who all the big companies own) then it becomes increasingly difficult to support legacy players when they simply won't want to change. They're like stagecoach companies 100 years ago trash talking the automobile rather than understanding why people are opting for an automobile.

Until taxi companies can adapt and move to an app based mind-set they're stuck with a legacy model tied around drivers sitting on taxi stands waiting for a fare which is inherently inefficient. Uber's biggest benefit is that by minimising driver downtime you're getting far more journeys. Just ask an average taxi driver how long they normally wait for fares (airports are a classic example where they can wait 1-2hr+ once they start waiting in a taxi rank) vs how long your average Uber driver spends.

blakamin

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# 1708283 23-Jan-2017 20:20

networkn:

Honestly, I am more surprised there aren't stories of serial killers operating in an Uber cab :)

Those types just pretend to be an Uber... It's happened a couple of times.

Once to a young actress. Luckily she looked twice at the app. They just pulled up and asked if she was the one waiting for an Uber (she actually was).. She looked at the app, realised that wasn't it, and they drove off. I don't think the cops ever got them.

dejadeadnz

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# 1708302 23-Jan-2017 20:44

networkn:

I am not Anti Uber, but they don't seem to be to "properly" setup. I think they had a great idea, some ideas on how to implement it, but no real idea how to manage it on a bigger scale. I am also of the opinion they don't share the "do no evil" ethos that some companies (try) to adhere to (yet).

It was almost inevitable to me they would be found to do something like this, however, I also believe they will learn their lesson, and a few more, find their place in the market and do their thing.

Honestly, I am more surprised there aren't stories of serial killers operating in an Uber cab :)

Once they factor in proper oversight, proper administration, compliance costs, etc, and pay their drivers a fair wage, I expect the price gap between them and taxi's will lessen.

A look at Uber's, well, uber losses

Uber is your classic freeloader in the parlance of economists. They are basically relying on cutting regulatory corners, drivers accepting terrible pay rates (because of how the macroeconomic climate is making a lot of people reliant on gig-based earnings/careers), and other methods to corner markets and expand in cannibalistic fashion. When they finally have total dominance, they will start showing their ugly side and attempt to recoup their shareholders' losses, IMO.

Handle9

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# 1708308 23-Jan-2017 20:53

I find Uber to be very similar to Amazon. I have serious concerns over the way they treat their employees and predatory practices but their service is just so much better than their competitors that I use them. If the taxi companies made any effort to compete it'd be a tougher decision but their service really is crap.

Rikkitic

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# 1708322 23-Jan-2017 21:09

sbiddle:

While I use Uber I find it a dilemma in that they're an evil company. The problem however in NZ is that none of the regular taxi companies are doing anything whatsoever to actually improve their products or services, something that really defies normal business practice when a competitor comes along and starts stealing your customers. While price is a major factor for many people it's not the only factor for me. When you've got the major taxi companies building terrible apps that are simply not functional and are stuck with a mind-set that they can rip people off with "electronic payment fees" (that just go back to Taxicharge who all the big companies own) then it becomes increasingly difficult to support legacy players when they simply won't want to change. They're like stagecoach companies 100 years ago trash talking the automobile rather than understanding why people are opting for an automobile.

Until taxi companies can adapt and move to an app based mind-set they're stuck with a legacy model tied around drivers sitting on taxi stands waiting for a fare which is inherently inefficient. Uber's biggest benefit is that by minimising driver downtime you're getting far more journeys. Just ask an average taxi driver how long they normally wait for fares (airports are a classic example where they can wait 1-2hr+ once they start waiting in a taxi rank) vs how long your average Uber driver spends.

What you describe is a lot like things used to be, and maybe still are, in Holland, especially Amsterdam. The Taxi operators had an unbreakable monopoly and they ran things like the mafia. Rides were some of the most expensive in the world and the 'service' was a joke. Obviously many individual operators were okay, but they had to work within the system if they wanted to work at all and there were plenty of cowboys dedicated to ripping customers off in any way they could. A real snakepit in dire need of a little competition. Whether Uber has made any inroads there, or whether things have improved at all, I don't know, but it is a classic illustration of what happens when there is only one game in town.

I reject your reality and substitute my own. - Adam Savage

sbiddle

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# 1708325 23-Jan-2017 21:20

Rikkitic:

What you describe is a lot like things used to be, and maybe still are, in Holland, especially Amsterdam. The Taxi operators had an unbreakable monopoly and they ran things like the mafia. Rides were some of the most expensive in the world and the 'service' was a joke. Obviously many individual operators were okay, but they had to work within the system if they wanted to work at all and there were plenty of cowboys dedicated to ripping customers off in any way they could. A real snakepit in dire need of a little competition. Whether Uber has made any inroads there, or whether things have improved at all, I don't know, but it is a classic illustration of what happens when there is only one game in town.

When I was last in San Francisco a few months ago I used Uber a lot, and also used Uber Pool which has become amazingly popular there. I had a couple of occasions catching the last BART back to Milbrae at night and hoping off with probably 25-30 other people and watching people pull out their phones and wait for rides. Identifying Uber and Lyft is pretty easy there with their illuminated front window signs and pretty much every person hoped in one or the other. There were 3 taxis waiting at Milbrae station and when I left after most other people (being locals they obviously ordered their ride before they arrived) there were still 3 taxis waiting there.