Are Uber passengers being scammed by drivers, or are the issues between drivers and passengers just a symptom of low fares and low driver pay? Senior RSG contributor John Ince tackles that question, plus addresses new lawsuits around the world and more, in this week’s round up.
Uber drivers are forcing riders to cancel trips when fares are too cheap [Quartz]
Sum and Substance: Travel guru The Points Guy is breaking up with Uber, he announced in an outraged blog post on Sept. 12. “I’ve been a loyal Uber user for seven years now,” he writes. “So loyal, in fact, that I have spent $81,600 on my business Uber account over the past three years. In 2018 alone, I forked over $33,812 to Uber through my business account.”
$33,812! With a little more than three months left in the year, that implies The Points Guy has spent a rough average of $130 a day on Uber this year, which, frankly, is insane, and more than the cost of an unlimited monthly subway pass in New York. (The Points Guy’s real name is Brian Kelly, and he and his eponymous website advise readers on the best credit cards, travel hacks, and ways to accumulate airline miles and points.)
But that’s not what has him breaking up with Uber. “The way Uber’s thanked me for my loyal business is by scamming me,” he says. “So, the headline of this article isn’t overly dramatic. It’s a sad fact.”
The “scam” goes like this: Over the weekend, Kelly requested an Uber in New York City and was assigned a driver. But the driver never arrived and couldn’t be found at the location shown on Uber’s map. The driver didn’t answer any calls from Kelly and so after several minutes of waiting he gave up, cancelled the trip, and was charged a $10 cancellation fee. (Based on images shared in Kelly’s blog post, he also tried to get an Uber to go two blocks on a busy section of Fifth Avenue in Manhattan’s Flatiron District, the equivalent of a two-minute walk.)
Kelly later complained to Uber, which refunded him the cancellation fee.
It turns out many people have had an experience like The Points Guy’s, and not just because they tried to get an Uber to go two blocks. These problems are particularly common at the airport. Something is off, but it’s not a “scam” like The Points Guy says. The problem is that Uber rides are too cheap.
Drivers only see where they’re going after accepting an incoming ride. They earn a cancellation fee when the rider takes more than two minutes to cancel, or if the rider takes more than five minutes to come to the pickup spot (in which case the driver can cancel). Drivers keep 75% to 80% of the cancellation fee, depending on when they started driving for Uber, and the company encourages drivers to maintain low cancellation rates.
Why would a driver try to get their rider to cancel? Probably if collecting the cancellation fee seemed like a better option than doing the trip…
“There are a lot of issues like this at airports because drivers have to wait in a digital queue for up to an hour for a ride,” Harry Campbell, author of the Rideshare Guide, told The Points Guy (the website, not the person) in a companion piece published today. “The most typical thing that you’ll see with drivers at airports is them calling for your destination. And the reason they do this is because they don’t want to wait in line for an hour and then get a short 10 or 15 minute ride, they’re hoping for a nice long one-hour ride.”
My Take: Sorry folks, but I’m afraid the bloom is off the rose. When I was first driving for Lyft and Uber four years ago, there was a certain cachet to the gig. It was new. It was exciting It was a little bit edgy and I didn’t mind telling people I was doing it.
But these days there’s just too much stuff out there about these companies and the way they’re treating drivers, regulators, passengers, employees and even investors. Here it’s an issue of drivers looking for a way around the issue of cheap fares, but there other issues and other reasons to question the underlying dynamics of the industry.
It’s become hard to hold you head up amidst the near constant stream of stories like this one where a loyal customer for years feels jilted by the company. They call it different things: they say they’ve been cheated, scammed, or disrespected. Whatever you call it, Uber and Lyft are no longer sweet smelling roses in the garden of innovation. They’re businesses trying to make a buck any way they can in a super competitive landscape. And there’s something about it that just doesn’t smell right – for me or for ex-loyalists like The Points Guy here.
Uber drivers in Denmark could face fines for every ride they offered [Techcrunch]
Sum and Substance: The Danish Supreme Court has upheld large fines issued to several Uber drivers for operating without a taxi license, at a time when the ride-hailing giant was still running its non-licensed p2p driver UberPop service in the market…
The level of fines is based on the number of Uber rides each driver carried out. In the case of the largest fine the unnamed individual had apparently run up 5,427 Uber rides…
Meanwhile Uber pulled out of Denmark early last year, blaming a new taxi law which includes requirements such as mandatory fare meters and seat sensors. Though it says it continues to engage with local authorities to lobby for the kind of tech-friendly reform which would enable it to return. When it left Denmark the company said it had more than 2,000 drivers in the market and 300,000 users.
Under its current CEO Dara Khosrowshahi, Uber is certainly trying to put founder Travis Kalanick’s legacy way of doing business behind it — dispensing apologies and emollient words. …
My Take: Another day, another adverse ruling somewhere in the world that forces Uber to retreat, retract or rethink its strategy. We’re one year into Dara Khosrowshahi’s tenure as CEO of Uber, but the company is still paying the price for Travis Kalanick’s indiscretions. Fines of the order of magnitude of tens of thousands of dollars for drivers are nothing to sneeze at. That’s big money to people who barely survive on fares of $5 and $10 at a time.
Uber Accused of Saving $500 Million a Year by Cheating Drivers [Bloomberg / Business Week]
Sum and Substance: Uber Technologies Inc. may be saving more than $500 million a year by misclassifying its California drivers as independent contractors, according to a lawsuit that claims the ride-hailing company is flouting a ruling by the state’s highest court.
Uber avoids paying an average of $9.07 an hour in expenses and benefits that it would incur if drivers were properly treated as employees, according to the complaint filed in federal court in San Francisco…
The case was brought by a car delivery service that alleges Uber uses its illegal labor savings to price rides below their true cost, allowing it to take business and market share from competitors that compensate drivers as employees…
My Take: This employee vs. independent contractor issue just isn’t going away for Uber any time soon. They can settle one case, but just as quickly another case springs up. How long can Uber keep its fingers in the dyke? Check out my upcoming article on The Rideshare Guy about the legal cloud that hangs over the entire gig worker economy.
Uber’s new logo is just the word ‘Uber’ [Mashable]
Sum and Substance: Uber hailed itself a new logo, and it’s, well, very Uber.
The company unveiled its new branding Wednesday and the ride-hailing company’s return to the “U.” The Uber app and everywhere the Uber icon appears (like on its Twitter page and website) will sport the new logo with a capitalized “U.” Uber Eats will also get a new look. …
Uber unveiled the process behind the black-and-white rebranding in an AdWeek exclusive, describing the nine-month design period that culminated in a custom typeface, called Uber Move. AdWeek reports that Uber CEO Dara Khosrowshahi paid special attention on the space between the “U” and lowercase “b,” and Uber subtly draws a connection between the new font and curvy roadways: Khosrowshahi is really hammering home that Uber is a mobility platform, meaning it’s not just an app for requesting a car ride, but also for renting scooters, e-bicycles, car rentals, and more.
My Take: As DK leaves his imprint on the new Uber, it was just a matter of time until the logo got a makeover. Not many people took well to TK’s new logo a few years ago. This one so far seems to be better received, as well it should be.
Readers, what do you think of this week’s round up?
-John @ RSG
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Latest posts by John Ince (see all)
- Uber Faces More Questions about Minors, Investments - November 10, 2018
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- The Rise of E-Bosses in the Gig Economy - October 27, 2018