Is Uber overcharging its customers and underpaying its drivers?

Uber is a cheap way to get around town. But could it be even cheaper? The country's largest ride-hailing company is accused in a lawsuit of deceiving its drivers and overcharging customers.

WASHINGTON (WUSA9) - Uber is a cheap way to get around town. But could it be even cheaper?

The country's largest ride-hailing company is accused in a lawsuit of deceiving its drivers and overcharging customers all to pocket extra cash.

Uber driver Bryan Fernandez suspected something was strange with customer charges and his driver earnings. So he and his girlfriend checked it out.

"Gave her a ride home, it charged her X amount,” Fernandez said. “And then it told me the fare cost a different amount."

When the WUSA9 Special Assignment Unit did similar tests with Uber rides in two cities, Washington and New York, the same thing happened.

"Sometimes they cheat,” said Uber driver Mohammad Reza.

On trip after trip, the WUSA9 Special Assignment Unit paid one fare, and Uber credited the driver with a lower fare. This discovery comes after drivers already know Uber takes a 25 percent service fee based on the agreement.

"Some of these are pennies. And some of these are dollars,” said James Conigliaro Jr. He’s the chief of staff of the International Association of Machinists and Aerospace Workers, the union that represents Uber drivers in New York.

"These companies have grown so big, and have so many drivers that they're doing hundreds of thousands of rides a day in New York City,” Conigliaro said. “And so whether it's pennies or dollars, it adds up to an enormous amount of money.”

Conigliaro estimated tens of millions of dollars go back into Uber's pockets.

For Bryan Fernandez, the situation is frustrating. He feels helpless to change the system.

“Unless there's some class action lawsuit by drivers, which I don't see happening," said Fernandez.

But a lawsuit has been filed.

"Uber's greed is just despicable at this point,” said Bobby Saadian, attorney for the Wilshire Law Firm in Los Angeles.

Saadian and his partner, Daniel Miller, have filed a class action lawsuit in California against Uber. They claim the pricing differences are deceptive.

"They're deceptive in the way they are dealing with this navigation situation,” Miller said. “And intentionally manipulating it for their own personal profit."

The lawsuit alleges Uber charges customers up front, based on the longest, slowest, most expensive route, while expecting the drivers' GPS to find a shorter, quicker way that ends up costing less.

Still, WUSA9 found the cost difference doesn't always swing Uber's way.

On some rides tracked by the WUSA9 Special Assignment Unit, the investigative team paid less than what the driver was paid by Uber.

Uber drivers may get paid more during surge and boost periods. But the opportunity comes only during Uber peak times.

Ultimately, on 10 out of 13 trips, the company got the better end of the deal.

So the Special Assignment Unit asked Uber, what is the deal?

Uber, the company worth billions of dollars and responsible for millions of riders, responded both to WUSA9 and to its own drivers.

The company sent a message to every single Uber driver. For the first time, the company publicly admitted sometimes a rider can pay higher or lower than what the driver earns for a trip.

Then Uber followed up with the following written statement to WUSA9:

"Drivers earn based on the work they perform, regardless of what a rider pays. This hasn't always been clear to drivers, so we're making improvements that bring full transparency into what a driver earns, what a rider pays, and what Uber makes on every trip,” wrote Bill Gibbons, Uber spokesman.

Those changes include showing drivers what riders are paying. But riders still won't know the cost difference, unless they compare with the driver after the trip.

The WUSA9 Special Assignment Unit did compare the rider's fare with Fernandez, the Uber driver. He got a fare from Uber that was $3 less than what Uber charged the WUSA9 investigative team riding in his car.

“No, of course that’s not fair,” Fernandez said.

This isn't the first time Uber has run into problems with its business model.

In May, Uber admitted it had made a mistake in the way it calculated its commissions in New York. The mistake cost tens of millions of dollars to its drivers in the Big Apple. The company vowed to correct the practice and pay back the drivers.

Uber's new transparency system with its drivers started in May. Other changes the company is promising include:

Terms of Service Update: Uber is updating its terms of service for drivers to bring more clarity to the way it prices fares for riders and drivers.

Exact Rates: Uber is publishing rate cards at partners.uber.com that show drivers the “net” amount of what they earn per-mile, per-minute (not gross).

Fare Latency: Uber is reducing the amount of time that it takes to calculate a fare after the trip from ~5 minutes to ~30 seconds.

Clearer In-App Earning Pages: Drivers will now be able to see how much they earned on a given trip and how it was calculated, including all Uber fees.

WUSA9


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