Uber said to use “sophisticated” software to defraud drivers, passengers | Hacker News Reader

Uber said to use “sophisticated” software to defraud drivers, passengers

arstechnica.com

343 pointsdralley224 comments

I don't see the scandal.

1) Uber's upfront estimate is based on a naive calculation of getting from A -> B. From a software perspective, that makes sense. The consumer hasn't even committed to riding, so let's just toss out a ballpark figure.

2) If the consumer looks at the figure and says, "Yes, that's reasonable for transportation from A -> B", which they indicate by clicking "Request Ride", then they are agreeing to pay that price for the service.

3) The rider can verbally request a different route once in the Uber.

4) The driver is paid based on minutes and miles, via some formula that they've agreed to. The rider is charged based on an up-front calculation, which they can decide if it is worth it or not.

It sounds like the lawsuit is alleging that the rider is being defrauded by being taken on a different route than the one displayed at time of purchase.

I think this is silly because, to my knowledge, everyone taking an Uber is paying for the transportation and not any particular route. I.e. being taken on a specific route isn't what the rider is agreeing to pay for. Also, as noted in (3), the rider is always free to change the route.

Additionally silly because the rider seems to be alleging that they were defrauded by being taken by a more efficient route. There just doesn't seem to be any "harm" in what's happening here. I can understand the case if the user agreed to go from San Francisco down to San Jose, based on a route straight down the 101 highway, then, once they got in, was driven to San Jose through Los Angeles.

It sounds like the lawsuit is alleging that riders and drivers are shown different fare estimates and that these fare estimates inform the final price paid by the rider to Uber and then from Uber to the driver (minus Uber's set fee). The lawsuit alleges that these two numbers are different and that Uber is taking an additional fee:

>>31. Upon conclusion of the transportation, the Uber Defendants collect the upfront rate from the User based on the longer route and time calculations but do not transmit the full fare collected to the drivers (minus the per transport service fee to which the Uber Defendants are entitled). Instead, the Uber Defendants often transmit or provide the driver with a fee based on a reduced fare amount. The Uber Defendants retain the difference in the fare charged to the User and the fare reported to the driver, in addition to the service fee and booking fee disclosed to drivers.

The lawsuit is brought by a driver, not a rider. They are claiming that Uber is stealing from them.

The driver is agreeing to be paid a certain amount for every ride, based on some formula involving miles, minutes, surging, bonuses, etc.

What the user sees is irrelevant.

The driver has accepted X rate for driving and the rider has accepted Y rate for riding. That those are different may sound bad but isn't fraud.

What you pay for a stock and what the buyer sells it for are not the same—brokerage fees, exchange fees, etc.—but that isn't fraud. The buyer is agreeing to pay a certain amount and the seller is agreeing to sell for a certain amount. They may feel bad if the difference is huge but that isn't fraud or evil, that's capitalism, markets, etc.

Please read the court documents. The lawsuit alleges that Uber's agreement with drivers had them acting solely as a payment collection agency, or at least this was the drivers' understanding. Under this agreement, Uber's job was to accept the payment ("fare") from the passenger including tolls and taxes then pay the driver the fare minus their cut for processing (20% to 25% of the fare "based on delineated factors").

The lawsuit assumes that the driver and the passenger are the two parties to the transaction and Uber is just a processor. This flows directly from Uber's stance on employees vs contractors and on their stance of being a marketplace that merely connects drivers and passengers, although the lawsuit doesn't allege that (in fact it alleges the opposite re: employees).

This idea of "the driver accepted X and the passenger accepted Y and Uber gets the spread" is a red herring. The passenger pays Z, the driver is paid Z, and Uber is paid (0.2 to 0.25)Z by the driver. This is the agreement. This is how the drivers have read and understood their agreement with Uber and whatever hypothetical fantasy you can concoct about how the agreement is or how the transaction should happen in your mind is irrelevant.

Everyone in this thread has it backwards, assuming Uber owes the driver a percentage of the fare. The driver owes Uber a percentage of the fare. Uber is taking more than (0.2 to 0.25)Z is what the lawsuit alleges and is covering it up with a "sophisticated" approach to commit fraud.

I read the court documents and believe that you are correct. It was my fault for reading the secondary summary and not the primary source.[0]

Tangentially, I don't think the last sentence in your third paragraph is a fair characterization and, frankly, unhelpful to your argument. I wasn't purposefully "concocting a hypothetical fantasy." I misunderstood Uber's relationship with its drivers, which I should have done more research on, but a simple correction would have sufficed.

[0]: Specifically on page 4, in sub-section (16) of https://arstechnica.com/wp-content/uploads/2017/04/uberdrver...

That changes Uber's position in the transaction. Uber pretends it is a payment processor. But this means Uber is buying the service from the driver, marking it up, and reselling it to the rider. This puts Uber much closer to being an employer.

> What you pay for a stock and what the buyer sells it for are not the same—brokerage fees, exchange fees, etc.—but that isn't fraud.

Brokerage and exchange fees are all set in advance and known by parties involved in the deal. What Uber does would be a fraud on financial markets.

FTFA: "When a rider uses Uber's app to hail a ride, the fare the app immediately shows to the passenger is based on a slower and longer route compared to the one displayed to the driver. The software displays a quicker, shorter route for the driver. But the rider pays the higher fee, and the driver's commission is paid from the cheaper, faster route, according to the lawsuit."

You just quoted the argument that my comment refuted. What is your argument?

1) Uber is saying "I can get you from A -> B for $Y" and the rider agrees to pay $Y.

2) It tells the driver that it will pay them $Z to drive from A -> B and the driver agrees to it.

So what? Where is the fraud?

Consider a similar circumstance in Amazon:

1) A merchant is saying "I can sell you this widget for $X" and the consumer agrees to pay $X.

2) Amazon tells the merchant that it will pay them $Y to sell the widget to a customer. $Y here is $X minus Amazon's cut. The merchant agrees to take $Y in exchange for the product.

Is that fraud? Of course not!

If your points #1 and #2 were in isolation, that would be fine. But the issue at hand is that those fares are justified by a evidence-based pricing policy, and the evidence in question are facts that Uber knows to be wrong.

If I'm a trader in the highly volatile Celery Stalk market, and I sign a contract with a restaurant that I'll sell them celery at a 5% markup over what I'm paying, and I actually take 7%, that's not "free trade", it's fraud.

Now I don't know exactly what the details of Uber's pricing calculations are. So maybe it's not quite like celery skimming. But it sounds close enough, and is probably worth a law suit to find out.

I see your point and understand why what Uber is doing feels kind of icky.

I don't see it as fraud, because I don't think Uber's up-front pricing is them saying "this is the best deal for you, the customer", but rather an offer to the customer to buy a product at that price. They don't have any fiduciary duty to give the customer the "best rate."

This feels like the trend now of people realizing that bank tellers aren't actually fiduciaries and getting upset when they—i.e. customers—are sold financial products that might not be necessary or in their best interest. Matt Levine has a section on this[0] (skip to the section on "cross-selling") and why people are upset.

[0]: https://www.bloomberg.com/view/articles/2017-03-13/spoofing-...

> They don't have any fiduciary duty to give the customer the "best rate."

This, to me, is the critical point from the rider side.

If drivers were ever told something along the lines of "We, Uber, take an x% cut of the fare" then I can see a court deciding that drivers were defrauded by Uber when they misrepresented what the user paid.

Yes, and I seem to have been wrong about their relationship. @abduhl pointed out that their agreement with drivers does say that they merely take a % of fares.[0] That agreement, though, seems to have been before the implementation of upfront pricing, so I don't know if the Technology Services Agreement had been modified.

[0] Page 4, sub-section (16) of the court documents https://arstechnica.com/wp-content/uploads/2017/04/uberdrver...

Yeah, okay. If A) that's true and B) Users paid a different amount than what Uber indicates to drivers was paid, it seems like drivers have an excellent case against Uber.

In which case we'll see Uber, a company that seems set on self-destruction at this point, pay a moderate settlement that's unlikely to be material compared to their funding.

> 2) It tells the driver that it will pay them $Z to drive from A -> B and the driver agrees to it.

I don't disagree with the overall sentiment that this seems like a non-issue.

However, the driver doesn't see the route, price, then agree to it. They see a pickup point of a passenger and agree to that alone. My understanding is that this is all the information they have when agreeing to a ride. It's a feature to prevent drivers being picky about passengers based on their trip value. It's one of the more important features to me. I've lived in two cities where cab drivers ask where you're going before letting you into the car for exactly this reason. In both cities it is both illegal and common practice.

The most charitable form of this same argument, assuming I've got my facts straight, seems to be: You've driven for Uber for >=1 ride and have a grasp on the reward structure and have chosen to continue doing the job in exchange for said reward structure.

The problem is that there's an implicit agreement that the amount the passenger is willing to pay is the gross amount the driver receives, of which fees are taken off the top.

The arbitrage between the shorter path and the longer path represents an undocumented fee given to Uber for no additional service rendered.

I don't see this as an implicit agreement. I see myself as purchasing a service from Uber, who fulfill that by subcontracting to a driver.

That doesn't jive with the story that Uber is providing a marketplace to connect independent drivers and passengers. Maybe Uber has dropped that way of framing what it does, but that's how they used to present themselves, as a technology company enabling transactions between drivers and passengers. Under that framing, where Uber is enabling a transaction instead of participating in two transactions, this would be like an online broker that sells your stock at $15.27 per share, tells you it sold at $15.25 per share, and pockets the $0.02 per share in addition to its advertised fees for the transaction.

This is actually how market makers operate. They buy/sell your stock, but the exchange also gives them a rebate on their fees. So selling your shares at $15.25 + fees (directly passed to you) but the exchange gives them a rebate of $0.02 per share. Naturally now your broker is incentivized to funnel transactions through whomever offers the best rebate, not the necessarily the best price.

Source: http://www.investopedia.com/articles/active-trading/042414/w...

You're describing a completely different scenario without any deception going on.

The question in my mind is whether uber is taking any risk in that arbitrage, if uber is essentially selling me "the rider" a swap (floating for fixed) it doesn't seem unreasonable they should be compensated for taking that risk

they are. If something unexpected comes up (say a high volume of traffic due to a sudden accident), then uber will have to pay the driver the higher amount.

Yeah - it doesn't seem unfair to get compensated for that risk

Terminology question: wouldn't arbitrage imply absence of risk?

If you're an academic, probably. Otherwise, almost never...

I've always kind of wondered that, because I see the word thrown around so freely as a fancy word for "opportunity", yet its textbook definition seemed a bit more nuanced.

How do you suppose that Uber is making any claims to you about what portion of your payment is going to the driver? I literally have no idea, when I book a ride, which dollars are going to whom.

They are not like a broker in that they do not advertise performing a transaction (whose price is known) at a certain fee. If your brokerage offers to sell 100 shares at $1, with a $5 fee, you know how much of the $105 should be going to whom. Uber only tells you a single, flat price.

If the driver is paid as a percentage of the ride and Uber tells the driver that the ride is cheaper than it truly was, that's fraud

Yep, this is the scandal, not that the passenger gets a more efficient route.

Not sure if the top level poster didn't read that part or just doesn't get it...

I think you're misinformed. Drivers are not paid with the percentage of the ride. THey're paid by miles and minutes.

As mentioned elsewhere in the thread, that's no longer true since Uber implemented upfront pricing.

https://www.uber.com/info/how-much-do-drivers-with-uber-make...

Drivers using the partner app are charged an Uber Fee as a percentage of each trip fare.

But they aren't. They're paid per minute and per mile.

This is not true anymore. It was at one point but now it's a static fare to take a person from x to y. That static fare is based on the route generated by Uber at the time that the trip is requested. Naturally, the static price is based on a minutes and miles estimation but it doesn't change in cases of unexpected delays or altered routes. The driver does maintain their ability to choose a different route, but it won't alter the cost to the rider or the driver's compensation. Passengers are shown the exact amount that a ride will cost at the time that they book.

I recently took a ride in SF where I asked the driver if we could stock for fast food along the way (I had just had a 6 hour flight and I can't eat on planes for fear of motion sickness). He said that a few months back he would have said yes but now that Uber has an upfront ride cost he wouldn't make any money while were were sitting in the driver through line. I had to eat so I offered $15 on top of the fare, great results, would ride again.

edit: It occurs to me that while users are offered a static fare, drivers could still be paid based on miles and minutes. That's obviously not how the driver in my example understood his compensation but it _could_ be the case.

Wait so what happens if I get in the Uber and ask them to take me somewhere else entirely?

You have to change your destination in the app which recalculates a new fare.

Which only works if they are employed by Uber, if they can't be independent consultants unless they have freedom to select their route.

Drivers have no obligation to stick to a particular route. The ride can be refunded if the route is egregiously long or indirect. Even then, if there is a valid reason (traffic, road closure) the ride can be upheld.

If riders are quoted a longer than optimal route, then that appears to be deceptive to me.

If they can take someone from A to B and then not get paid for it because of that kind of rule in how the task is preformed that's highly directed work of the kind you would give an employee.

Please take a step back and think about it.

If you contracted me to install cabinets in your kitchen, I couldn't defensibly take 1 year to install them, if I estimated 3 days. This doesn't make all cabinet installers employees.

3 days or 4 days and you still pay. Uber can't offord a 33% increase in trip length when paying per mile so defacto they are going to have very tight tolerances.

Further the scoring is separately done by the customer. So the conversation is "Can you take the scenic trip? Sorry can't." Further it goes that way because Uber drivers are employed by Uber not independent contractors connected by Uber to customers.

I think you interpret "egregious" differently than I do. You appear to be responding to a set of points I never made, while not addressing the one I did.

Why is that? If I have a job and I know exactly how I want it's done then I can't hire a contractor?

The general rule for Contractors is could they hand the work to a 3rd party, though the actual test gets complex. https://www.irs.gov/taxtopics/tc762.html

Basically if you want a sink replaced you can define what the sink will look like and function etc but not which tools they use to fix it. When someone is providing core business functions for a year+ receiving constant directions for short term tasks has direct customer interactions thus representing your business etc they just don't have much wiggle room.

Which is an argument about their employment status, not the alleged fraud issue in the story.

How would I, a passenger, even know what Uber's rake is? It's not shown anywhere.

> 4) The driver is paid based on minutes and miles, via some formula that they've agreed to.

TFA says the driver is paid based on an estimate of minutes and miles. This to me is key...

If both the driver and passenger are paying based on an estimate of miles and minutes, then it should be the same estimate for both of them.

However, if the driver is paid by Uber for actual recorded miles and minutes, but the passenger is paying a fixed rate based on the estimated miles and minutes, then I think Uber is absolutely in the clear.

Assuming it's the later, here's how I see it. The miles/minutes estimate provided to the customer is used to derive a fixed price contract for the ride. The customer sees a price, and can decide if they want to accept it. The contract between Uber and the Customer is now set.

On the driver side, I don't know if drivers are contractually supposed to follow exact route instructions from the app, or if they are allowed to deviate based on their own knowledge of the route. But in any case the app is giving turn-by-turn real-time instructions to the driver, instructions which can change minute to minute as the route conditions change. This is necessarily a completely different algorithm than the fare quoter.

There's no requirement, or even a reasonable expectation, that Uber is charging the passenger a fixed price increment over the amount paid to the driver. Based on anecdotal UberPool reports, I would expect there are in fact many cases where the passenger is actually paying less than what the driver is being paid.

On the other hand, if both driver and passenger are paying/paid based on a pure estimate of the miles/minutes to get from A->B then it is a bit of an eyebrow raise if there's a spread between the estimates which Uber profits off of.

You've misread the article. It in fact says that the driver is paid for actual miles/minutes.

> Meanwhile, the software utilized in the driver’s application, which navigates the drivers to the User’s destination, utilizes traffic conditions and other variables to provide the driver with a more efficient, shorter, or quicker route to the User’s destination, resulting in a lower fare payout to the driver.

Further, if you read the actual lawsuit, its clear that the lawsuit is simply claiming that Uber shouldn't be able to pocket the difference between the higher estimated collected amount, and the lower actual amount. They are claiming that Uber represented to them that they "were receiving the full fare, minus the [Uber's] service and booking fees"

This was the part of TFA which was unclear to me;

  This latest lawsuit claims that Uber implemented
  the so-called "upfront" pricing scheme in September
  and informed drivers that fares are calculated on a
  per-mile and per-minute charge for the estimated
  distance and time of a ride.

So reading that again I think you're right that's just talking about fares passengers pay, not fares paid to the driver.

Another key question -- what if Uber underestimates due to changing traffic conditions? Does the driver get underpaid? I doubt it.

So of course the estimate is going to be conservative. So what's the contract say? Probably pretty clearly drivers are paid on actual miles and minutes and not Uber's estimate. I mean, if drivers were paid on the estimate, Uber would still probably be getting sued because it is sometimes low.

It doesn't make sense engineering and product wise to pay the drivers on the estimate instead of waiting for the trip to finish and do the fare calculation. So I think the latter sounds reasonable.

I think the core debate should not be about payment based on estimate/actual (for whichever party), but rather whether there are to transactions (uber-driver and uber-rider) or one (rider-driver), which Uber facilitates. Or as other commenters worded, whether rider is paid for minutes/miles/trips by Uber, or minutes/miles/trips by rider with fixed Uber's cut. Calculation method is irrelevant here.

That's like saying the horse meat scandal doesn't matter because horse meat tastes just as good as beef. If you purposely deceive consumers in a calculated way to skim off profit, you will have problems as a business. Consumers need to trust the product or service they are buying.

Consumers pay the exact amount they are shown upfront. I'd much rather pay a slight premium than not know upfront how much a ride will cost.

For me, the fixed upfront cost is one of the biggest selling points for Uber over taxis.

Uber gets from point A to point B and charges me exactly what they quoted. How is this horse meat substituted for beef?

Yeah it isn't a problem for the rider, the driver is the one getting defrauded.

Suppose I'm a farmer and I've authorized you as a reseller of my beef, and you're making 5% commission on whatever you sell, and I give you some price flexibility.

If you sell my beef for $10 a pound, then report to me you sold it for $8 a pound, and pocket that $2 in addition to your 5% commission, you've stolen from me.

(having been an uber/lyft driver) I would say this is exactly wrong. The person being "cheated" is the rider - because if the rider is not knowledgeable enough to know that the ride could be less if they went with the "not-estimated" rate, then they could have not paid upfront instead letting the ride roll.

The driver gets paid for miles and minutes. Moreover, if say something unexpected happens, say traffic, Uber will eat the difference.

I mean if uber loses the lawsuit, they are simply going to change the T&C with the driver so that all rides are preset, and the driver will be paid the estimated rates, and drivers will get screwed when there's lots of traffic.

With the estimated rate, the product sold to the customer is the trip, not the time/mileage. As the driver is a contractor and not an employee of uber, they are an intermediary in the transaction. They are reselling the trip for me for a significant cut. If they sell it for more and don't give me my fair cut, that's theft.

In any case, technically everyone is getting screwed and they likely end up sharing whatever the markup is. (Driver loses wages, user pays more).

it's not theft. The driver contract says you get paid back for the time and mileage that you incur, NOT "whatever the customer gets paid". Besides, if the trip goes over the amount that the customer pays (beacause, say, for traffic, or an unmarked road closure) then uber pays out the full amount to the driver for the actual time/mileage incurred.

let's say that Uber posted really unreasonably fast times for the given route instead. Would you then argue that uber could systematically pay the drivers a lower rate, because that's the fare they pitched to the passenger?

Well, it depends entirely on the contract between the farmer and the reseller. If the contract states you get the retail price minus 5% and I lie to you about the retail price, certainly this is fraud. But if the contract states you get $X/pound, and that's exactly what I pay you, the retail price never enters into it.

If later on the farmer complains that they were paid according to the contract terms, but their meat is retailing for a higher markup than they expected because of its enticing packaging, I don't see how the farmer is entitled to any relief on that.

The impression I get from the comments here isn't that people are upset that customers could have gotten a slightly better deal. The bigger issue seems to be that Uber is keeping a greater percentage of the money then they would otherwise have been entitled to.

It's the drivers who are being defrauded.

Uber tells passenger the ride will cost $5.00 Uber tells driver the ride will cost $4.00 (from which Uber takes a cut) Uber pockets the entire $1 difference.

I think you're misinformed. Uber tells the rider the ride will cost $5. Uber doesn't tell the drivers how much the ride will cost until the trip is finished. Then the fare is calculated based on miles and minutes. If the fare ended up > $5 then Uber will pay for the difference. If the fare ended up < $5 then Uber will take the difference. Seems reasonable to me.

How often would you think Uber undershoots the estimate?

Probably not that often - but it doesn't sound like its risk less for them

well they're losing billion of dollars every quarter so I'd say pretty often.

I meant: how often do they lose the spread?

On the other hand, if the ride ends up paying the driver $6 because the driver has to change routes because of construction/traffic/etc, I believe Uber eats the $1 difference

I didn't gather that from the article; if you are right then it will be apparent in the court case.

Because the driver is not paid based on that rate. That is fraud.

Being able to put yourself on the driver shoes will help you see the scandal.

Suppose we are starting a freelancing company together, the agreement is that you will get 50% of every contract, I will get the other half. What I won't tell you is that I control the contracts we get to sign and I can adjust the contracts as I wish (we never agreed on that, I just do).

This month we closed a deal, we will be incubated in a company for 2 months, 40 hours a week, the contract I signed was for 240$/hour for each one of us, totalling 150,000 $. The contract I show you shows a total of 80,000 $.

How would you feel when you discovered that you should have made 75k on this deal instead of 40k?

To scale up the principle a little... Uber acts like a real estate agent, they charge the seller a percentage of the total for the service of connecting a buyer and a seller.

Imagine you were selling a house, and your agent came to you with an offer of $1M, of which they would take a 10% commission. You agree to this, but find out later that the buyer actually offered $1.1M. The fact that each party agreed to the transaction with the real estate agent isn't relevant here. What is relevant is that if you charge for services based on a percentage of the price, you can't then set different prices at both ends, this strongly violates the expectations of the contract.

Looking at https://www.uber.com/info/how-much-do-drivers-with-uber-make..., it says "Drivers using the partner app are charged an Uber Fee as a percentage of each trip fare." This is analogous to the real estate agent example, and this is why this is fraud on Uber's behalf. If they told drivers that they were simply buying their services for an arbitrary price, then it would be fine, but they don't say that.

More to the point, Uber pretends to work like a real estate agent, while they are de facto acting like a reseller.

Like you said, if they would not try to weasel out of the responsibility that comes with being a reseller, all of this would be perfectly fine.

This is why taxis in NYC have standardized fare meters, and very explicit regulations surrounding their use.

If this is it, I also don't see the scandal. But now consider the app behavior over many rides instead of a single ride. If the driver and passenger app are "honest" and there aren't bugs in calculating the route then they should converge in their estimates so that the average (distance, price, whatever) metric displayed is the same in both apps. If the driver estimate is systematically smaller than the passenger estimate, IANAL but that seems like a big problem for Uber.

In the app, if you select (i) under the estimate, then select (i) again at the Fare, then you are presented with the Fare Breakdown.

For a fare requested in San Francisco, it specifies:

    Base Fare     $2
    Booking Fee   $1.75
    Minimum Fare  $6.75
    + Per Minute  $0.22
    + Per Mile    $1.15

If the eventual time and mileage are less, then hasn't Uber broken the contract by charging the upfront estimate? It sounds like fraud; I don't know if it legally meets the elements for the fraud.

I personally have not seen prices increase in the past year, but I could have been affected by this. I also could have had a lower charge than the estimate at the end of the trip; I haven't paid attention to it. But now I will.

I've never seen Uber provide the intended route prior to accepting the ride (although this may just be caused by PTSD from their latest UI update or the fact that I take mostly UberPools).

In their wording of the fare breakdown it says that the "fare will be the price presented before the trip or based on the rates below and other applicable surcharges and adjustments". With their technical wording they wouldn't have an obligation to pay you the lowest fare of the two, but they could charge you the higher option.

However, on the screen prior to that it states that "the fare will be the price presented upon booking" unless if "the journey changes, the fare will be based on the rates provided" (which obviously vary by location).

I don't really see how they could get away with the bait and switch without it being pure fraud. I'll have to check this out next time I get an UberX but I seriously doubt if this allegation were to be found true that this would still be enabled.

> I think this is silly because, to my knowledge, everyone taking an Uber is paying for the transportation and not any particular route. I.e. being taken on a specific route isn't what the rider is agreeing to pay for. Also, as noted in (3), the rider is always free to change the route.

Doesn't that imply that the passenger shouldn't be charged based on the _estimate_ (tour point #1)? This article makes it sound like they are being charged for the estimate, rather than actual drive time

Ever since Uber added this feature, the fare charged to me has never differed from the estimate unless I changed the destination mid-ride.

If the ride is charged to the user at the price of an elevated quote, but billed to the driver at the actual route... that's not fraud to you?

This would hold if Uber was effectively employing drivers to transport people from A to B.

But Uber is aledgedly merely a matchmaking platform for users and drivers. Therefore, algorithms to significantly and stealthily arbitrage the difference between clients' offers and the drivers' bids is quite murky, and, in other marketmaking businesses, highly illegal.

I think you're exactly on point and I think the only avenue for litigation here is possibly 4 for the drivers (and that's an if). I think you're spot on with the riders -- they agreed to and are getting a services, there's no harm they've suffered if they got a better service, plus there has to be a point of agreement in order to do the purchase.

>Uber's upfront estimate is based on a naive calculation of getting from A -> B.

That's not the claim at all. The claim is Uber is charging you for a 10 minute trip it knows is only gonna take 9 minutes. It's not naive, but purposefully wrong in order to get a higher cut of the fare than the driver was told.

I think this is silly because... being taken on a specific route isn't what the rider is agreeing to pay for.

It's a free country, and you think whatever you want. But in this case your expectations would be greatly at odds with: (1) what most customers would expect, and (2) what relevant statutes would most likely have to say about the matter, as well.

is the price that the customer paid fixed? And the price the driver is paid variable (distance/time), if so I see no problem with this, as uber is taking a risk of detour/traffic etc. if Uber is not taking any risk then it's BS.

As user if I don't feel defrauded then there is no real fraud. Uber's pricing seems fair and reasonable. The lawsuit is just nitpicking.

Uber has killed so much goodwill and their reputation so well that no one will be surprised at almost any accusation directed at Uber.

I know my first thought was "not surprising", and I imagine others will think the same.

One time when I took an Uber, the driver told me how Uber was defrauding him. He had his friend order an Uber, and he made sure to pick him up, and they compared the prices. The prices, unsurprisingly, were much higher for the passenger than for the driver.

The difficulty of course is proving this to be true. And then the question is how much does Uber lose from a settlement? Probably less than they earned from price manipulation.

But at this point it seems people might actually think negatively of Uber as a whole, but how long that will stick is hard to say.

Uber's driver agreement isn't and has never been, "You get X% of the fare we charge." It's "You get $X for this fare." (Based on some combination of time and distance actuals, which are also transparent, along with any multipliers.)

If I can charge a rider $10 for a ride and get a driver to accept $5, no one's "defrauded". They may not like the spread, but that's easy to solve: riders, don't pay $10, and drivers, don't accept $5 in the first place.

Uber drivers don't get to accept or reject rides based on destination or cost. All they know is the pickup location of the passenger.

You really have to go through a lot of contortions to defend Uber on this one. Remember when Best Buy created an entire shadow web site just to keep people from looking up prices in the store? Maybe not illegal, but not a great business practice.

> Remember when Best Buy created an entire shadow web site just to keep people from looking up prices in the store?

No, because they never did that. The explanations that came out ten years ago made sense, about different regions having different pricing structures and the national price not always matching in-store. One spends different amounts to retail items in different areas of the world. That was a Consumerist/Gizmodo/Connecticut hullabaloo over nothing, which continues to this day at pretty much every retailer I can think of. I can totally understand an in-store kiosk showing in-store prices, and there are more non-nefarious explanations for the entire scenario than nefarious. I say that disliking Best Buy.

Take gasoline, for example. Notice it's cheaper when you cross an arbitrary governmental border? California into Nevada is my favorite. Notice Chipotle, hell, Taco Bell is cheaper (sometimes >20%) in some places than others? It's all the same issue.

I was unclear. When I say $X I don't mean a flat amount per fare. (You are correct in that regard.) I mean an agreed upon payment formula of $y * miles + $z * miles = $X. That formula is not secret. And does not contain $fare as a variable.

Uber drivers are free to leave.

(And yes, I agree that this might not be a good business practice. I like my business practices honest and simple.)

No. That is a terrible, terrible defense.

Why? spcelzrd talked about how uber drivers don't get too choose on each specific ride, and that's true. But that's besides the point: they are playing something like an iterated prisoners' dilemma with uber; but they are free to take their business elsewhere, if uber 'defects' too much.

This is incorrect, per the complaint:

v. In exchange for use of the Uber Software, drivers will be charged a service fee on a per transportation basis calculated as a percentage of the determined fare.

This is found under the allegations section of the lawsuit.

Good point! We'd have to dig into the user agreement itself to see what nuances exist there. Based on this complaint alone, I suspect Uber will argue "determined fare" may not mean "fare charged to rider" and that drivers are paid on the actual ("determined") miles and time.

Additionally, I find the allegation that Uber created upfront pricing for "the purposes of creating this discrepancy" to be very difficult to prove. Is this intended to highlight the difference between a breach of contract and "malicious fraud"?

By the way, here's an article from last summer on the same topic, quoting Uber as saying:

“With upfront fares, riders agree to a fare that’s calculated in advance while drivers get paid based on a per-mile, per-minute rate as is normal with uberX,” the spokesman told Fortune. “Because no predictive model is 100% perfect, what riders pay and drivers earn on a trip may differ slightly from time to time.”[1]

However, it is confusing, and Uber's own site makes no mention of upfront pricing and says:

"Drivers using the partner app are charged an Uber Fee as a percentage of each trip fare."

Those two statements are at odds with each other, and both are from official Uber sources.

[1] https://www.google.com/amp/amp.timeinc.net/fortune/2016/10/0...

[2] https://www.uber.com/info/how-much-do-drivers-with-uber-make...

This isn't a "spread." This is Uber charging the passenger one fare and paying the driver as if the passenger paid a smaller fare, without telling the driver or the rider that it is doing that. It's more like a broker quoting two different spreads to either end of a transaction and skimming off the top.

But see above. What I pay the driver has no direct relationship to what I charge the rider (or vice versa). The financial metaphor breaks down here.

They correlate, sure: both formulas include miles and time (or estimates thereof). But they're not bound nor guaranteed to move in lockstep.

That drivers (or riders) thought they did is not a legal argument. (Unless they were led to believe false information by Uber itself.)

That drivers thought they did is a legal argument if a reasonable person would think that.

If the variables are the same to calculate both prices, then it's Uber's cut which is variable.

Doesn't sound like a fraud to me, but let's take for example payment: wasn't Stripe main success driver the simple (and predictable) pricing rule[1]. How long before Lyft or some other company steals drivers from Uber this way?

[1] Together with saner APIs, to be fair.

More than that: they're different vatiables. One is actual, measured time and distance: this is how drivers are paid. The other is estimated time and distance wrapped up in a risk modeling / worst-case analysis: this is how riders are charged.

Estimation vs. measurement. The two converge in an ideal world where risk drops to zero and estimation methodologies are perfect.

No. It is extremely dishonest of Uber to do this.

I don't really understand why Uber would be required to show the same price to both sides unless contractually obligated. When I hire a contractor to renovate my house he doesn't typically show me the invoices to all his subs. He negotiates one price with them and a different price with me.

According to the complaint, this was part of the contract:

  52. The Uber Defendants and Plaintiff and the other Class Members had a
  contractual agreement regarding the collection, receipt, and payment to drivers of the
  fares paid by Users for the driver’s transportation services.
  53. The Uber Defendants agreed that they would collect and pay to the
  Plaintiff the fare by the User, minus a contractual service fee and booking fee.
  54. As a result of the misrepresentations and omissions alleged herein,
  including the Uber Defendants' failure to remit payment to the Plaintiff and other Class
  members of the full amount of the fare (after deducting the contractual service fee
  percentage and booking fee), there has been a violation or breach of the agreement
  between Plaintiff and the Uber Defendants. Accordingly, Plaintiff and the other Class
  members have been underpaid for their services and did not receive the benefit of
  their bargain.

If the contract with drivers did, in fact, say that Uber would pay out the fare that the user paid minus a standard service and booking fee, then it seems like this is pretty solid, though IANAL. I have no idea if that's what the actual agreement is, though.

I don't know what any contracts say, or may have said in the past, but the Uber website makes it clear that drivers are paid a pretty fixed rate based on time and distance. I'm sure there's some extra details around the high demand times and all that, but there's no mention of getting paid a fixed %.

https://www.uber.com/info/how-much-do-drivers-with-uber-make...

Perhaps the contract changed at some point, and Uber decided it didn't need to honor the prior contracts (or was negligent in taking them into account)?

Edit: Not to imply the accusations are valid. I'm not trying to make a case that Uber must be guilty, as much as my wording could be read that way depending on how you approach it.

Perhaps, but there hasn't been any demonstration of that so far.

There's not a lot of details in the story.

If the driver's payment is supposed to be based on the fare and Uber is misrepresenting the amount of the fare collected from the passenger, that's a problem.

According to the Uber website, drivers get paid based on time and distance.

https://www.uber.com/info/how-much-do-drivers-with-uber-make...

>Los Angeles - $0.15 per minute and $0.90 per mile

>San Francisco - $0.22 per minute and $1.15 per mile

>Chicago - $0.20 per minute and $0.90 per mile

>Boston - $0.20 per minute and $1.24 per mile

The minus the Uber Fee sprinkled all over that page makes it marketing.

Of course it's marketing. The website is obviously not a legally binding contract. The point is that it's not in any way described as being an fixed percentage of what the passenger pays. That's just not the payment mechanism at all. Of course, the devil is in the details, but it would really surprise me if Uber's contract had a completely different compensation model than the website.

The company that routinely breaks laws as their business model? It would surprise you if they broke another law?

No, it wouldn't surprise me that they broke the law. I'm still going to request some actual evidence though.

If they're using a fraudulent route as the basis for the price, that's like your contractor billing you for more manhours than it actually took.

When I'm asked to provide a quote for service, I estimate the amount of time it will take me, and send the customer a quote based on this. But I don't tell the customer that they are paying me by the hour -- I say this is what I am charging you for me to do X.

If I estimate 40 hours but it takes 37, the customer still pays for 40. If it takes 43 hours, the customer still pays 40.

I believe this is how a good portion of contract work works.

That doesn't seem to be quite the whole story, though.

Suppose I'm a contractor you've hired to remodel your house. I tell you that I can get a plumber to do it for $5,000, of which I'll get some cut, and you agree. Then I go to a plumber and tell them you're willing to pay $4,500 for the job, and they agree. I pocket the extra $500.

Have I been honest in this scenario?

No I think you've got it wrong. Drivers are paid by miles and minutes after the trip is done. It's like "I'm a contractor you've hired to remodel your house. I tell you that I can get a plumber to do it for $5,000, of which I'll get some cut, and you agree. Then I go to a plumber and ask them to do the work, of which I'll pay them $50/hour. If the actual work take them more than 100 hours (>$5000). Then I'll pay the difference. If the actual work take less than 100 hours then I pocket the difference." Have I been honest in this scenario?

It's very similar to that Jobs and Wozniak story, about how Jobs scored a contract and split it with Wozniak, and much later found out that the contract was actually for a way higher price and Jobs pocketed almost all of it.

Weird to see "hacker" news full of people defending Jobs/Uber, but I guess it is what it is.

These aren't just estimates, they are minimum bills that are purported to be based on "time and distance of the route"[1] and if they systematically and intentionally padding time and distance that sounds an awful lot like fraud. IANAL and it may not be technical fraud but it is at best a deceptive business practice and again one of the reasons we have taxi regulators.

[1] https://help.uber.com/h/d2d43bbc-f4bb-4882-b8bb-4bd8acf03a9d

Uber drivers get paid based on time and mileage. What the passenger pays is irrelevant. So the only thing that would matter is if the driver's tachometer and clock don't match up with Uber's.

Don't they mention in recruiting material they pay a %.

My understanding, based on other comments here, is that Uber recently changed its pricing model so that riders get a fixed price, but drivers still get a range based on distance and time. Obviously the rider's fixed price needs to have some cushion in it. It's a change, and recruiting material may need to be changed if it wasn't already, but it's hardly a scandal. Also, the % could remain the same if Uber is still paying that % in aggregate.

Oh no, they are making money off you! /s

So often I hear people who really think that companies are milking them, in reality the company is asking a fair price based on wage and company expenses. (of course some companies do really overcharge)

ps, not directed at you. but more an extent to what you said.

Well Uber is one of the more blatantly antisocial companies out there. But skimming through the comments, if the accusations are true, I have to wonder - are they that stupid? Why would anyone think they could get away with showing two different prices to driver and passenger? People don't live in isolation, they talk to each other. Sometimes a driver will pick up their friend. And a driver can also be a passenger when not working...

No one cares... outside of tech circles. Even then, I bet a ton of people will still use it, why? Convenience, price and "what does that have to do with me?" mentality. If I am being honest, I will still use Uber... especially in Colombia and other places where it totally obliterates cabs.

It's not a binary choice. I can use Uber and still pressure them to be a less shitty corporation.

How exactly do you apply that pressure?

Contact them directly and express concern over business practices or behavior.

Contact your government representatives and ask them to regulate Uber and their business practices.

Share news reports with your friends so they understand the problem as well.

I don't use Uber or Walmart because I feel these companies are destructive (on balance) to society. That doesn't prevent me from complaining when Lyft or Target fails to be a good corporate citizen.

it will be hard to find an uber if drivers get tired of being ripped off

Upon self-examination, I file such stories in one of two buckets: "aww, no way; convince me" and "yeah, I'd believe that". Apple is taking your Apple Pay transactions and buying Ferraris with the rounding errors? Yeaaaah, you're going to need some easily-verified facts for that one. Uber is running a child porn ring in their basement to make ends meet? I'm a bit skeptical, but I'll most take that at face value given everything else.

Mine was literally "Disappointed but not surprised."

To me it seems the disconnect here is between the fixed fee on one side (the passenger) and the flexible fee on the other side (the driver).

Uber is, sort of, acting as an insurer and underwriting the cost of the journey. The passenger pays a fixed fee for a projection of how much the route will cost and the driver gets paid by how much it actually costs in driving time and distance. If there is some sort of unexpected delay and the journey takes longer then, presumably, the driver will be paid more than the passenger paid so Uber will lose out.

As with all insurers Uber charges a higher initial charge to act as a buffer and minimise the chances of losing money on the journey.

I can't really see any way of getting round this as long as the passenger pays a fixed price and the driver is paid a flexible fee.

Both driver and passenger think they know the full truth of the matter for the financial transaction they're agreeing to, but they don't. There's implicit dishonesty in that, and when you combine dishonesty with money we call it 'fraud' usually.

But let's set aside the question of whether it was legal. Was it moral?

Software like this doesn't fall from the sky- management approved it, software teams wrote it, maintain it and system tests probably exist to validate it works... how do those developers feel okay about this? How do they not feel like they're cheating people out of money? When your Mom hears about it, and asks if you were part of it will you spend 20 minutes giving a long-winded answer about how it was actually not a bad thing? That's a bad sign, man.

I'm reminded of the scene from 'Clerks' discussing Contractors[0]

[0]https://www.youtube.com/watch?v=iQdDRrcAOjA

If we're talking morality, then let's remember that Uber has been very lacking in that area for many years now; they also don't mind, and they're pretty open about them not minding. So from that point of view, nothing new really happened here. It's same old Uber, doing same old shitty and exploitative things to people.

I think people misunderstand upfront fares. Its like buying an airplane ticket: the airline charges passengers the appropriate price to fill the plane, and it pays pilots a salary. Pilots who fly more profitable routes don't get paid bonuses because their passengers pay more. Same thing with UPS drivers, who get paid a fixed amount to drive packages around. The concept of "up front fares" seems to be widely practiced in logistics companies, and is probably a part of the transition as ride sharing companies become less like taxis and more like UPS/airlines.

Your analogy does not work because UPS drivers and Pilots are either salaried or hourly employees. Their contract is very clear and also covered by employment law.

Uber treats drivers as contractors and then makes certain representations about the payment structure. The allegations here are the equivalent of airlines telling pilots that they get paid a percentage of all the fares, then lying about the total fares.

Pilots who fly better routes do get paid more.

Because seniority.

http://www.askthepilot.com/questionanswers/seniority/

(better may not always equate to most profitable though, it might be other things like schedule)

Pilots aren't contractors. Uber drivers are.

The fare discrepancy can extend beyond longer/shorter route calculation -- there is also the issue of surge price disparity between driver and passenger. For example, the user would see 3x surge pricing while the driver would see 2x surge pricing, where the user is charged for 3x but the driver is paid for 2x. This is pure speculation and I have not witnessed this behavior but it's another way things can go wrong in Uber's favor.

Uber might be able to defend itself saying that the data provided to the driver and passenger are different because of misconfigured caching and stale data being served to either party, but it's a moot point in case Ars Technica has concrete and verifible claims of methodical and programmatic fraud. Personally I have witnessed being billed for $0 in-app after taking a round trip (effectively zero distance traveled) but the email notification showed the proper billing value, and there may be more instances of this "confusion."

As an Uber user, I'm unaware of this "upfront" pricing model. I thought the price charged was based on the actual time/distance (which, incidentally, they email me on the receipt). I know I can estimate the trip cost, but I thought that was just an estimate.

Am I wrong? What is this "upfront" pricing?

And is the reverse true? E.g., can I commit to some committed price then have the driver take some crazy route?

I'm wrong. Huh.

https://qz.com/874224/this-year-you-wont-wake-up-to-a-shocki...

But seeing this, it's neither sophisticated nor malicious. They changed their customer pricing model from time-and-miles to fixed-price. That doesn't defraud anyone. And of course Uber is going to balance their increased risk (i.e., that their estimate is too low) against better profitability and customer experience.

Like, duh.

Similarly, Uber didn't change their pricing model for drivers. It's still time-and-miles. You can certainly argue that drivers should get "more", but are drivers willing to shoulder the increased risk as well? I could see this story going the other way: Uber Slams Drivers With Increased Risk, Lower Pay with an example of some driver getting paid $10 for some crazy-long trip during a snowstorm.

I was also very confused about this -- I am a heavy Uber user and was under the impression that I was paying a flagfall plus minutes & kilometers rate.

There's a hint about my confusion in what I just said above: I'm from Australia, where drivers are considered contractors by the Australian Tax Office and must know the gross amount charged for the purposes of calculating their GST (a 10% VAT) burden.

I suspect that Uber aren't able to bring upfront pricing in here without a considerable fight.

A bit off topic, but I was just in New Orleans for a fun trip. I normally use Lyft, but apparently Lyft pickups were not allowed at the airport so I used Uber (my last Uber ride was months ago).

After waiting at least 15 minutes in the pickup spot, my driver cancelled. Annoyed, I requested another Uber ride (which went fine). However, I was shocked to learn that Uber had still charged me a cancellation fee for the first ride and continued to argue it was appropriate when I protested.

I finally resolved it when I continued to press the issue, but I found the whole scenario incredibly customer-hostile. Along with the litany of gross Uber stories, I will continue to prefer Lyft!

I ran into the cancellation loop a few months ago in Oakland. Had 3 drivers confirm, after 10-15 minutes cancel. Ironically, one driver called to tell me she was cancelling for another ride and then literally drove by us.

This just sounds like Uber quickly charges you for the worst case since if they charge you for the best case and things go wrong, Uber loses. No one can know what route will even be possible given how chaotic traffic and closures can be. Then the driver gets paid by whatever route is actually taken. I don't really see this as an issue at all.

If it is merely traffic changes, why is the customer not getting a cheaper ride if the route is shorter? If the customer is paying more, why isn't that money going to the driver?

One of the beautiful aspects of Uber over say, taking a taxi, is that you only pay the one price no matter what. You don't have to worry over the route. You don't have to do anything other than get in a car and know you will get where you want to for the price you agreed to.

Also, if there is a fare left over, why should it go to the driver? Uber isn't existing to just get rides for drivers and forward all proceeds to them. They are a giant company that needs to be making money off of every ride. A lot more money than they are making now if they are ever going to be cashflow positive.

Uh, is that true, at all?

So that comment asserts: 1. When using Uber you lock in the price upfront. 2. People like to be certain about prices. 3. Uber is capitalist and likes to keep money. 4. Uber has profitability issues.

All of those look true to me. What part do you think isn't true?

On Uber Pool, perhaps you lock in the price. But on the normal rides, if there is traffic etc I'm pretty sure your fee can vary quite a bit.

If Uber wanted to protect themselves, they'd authorize for the slower route and settle for the actual route (up to authorization).

It sounds like Uber is using two estimates (or possibly an estimate and a actual; unclear from article) and simply pocketing the difference to increase their margins.

It's an incredibly deceptive practice if Uber is billing you for a route it doesn't intend to send you on. As a customer, I feel it's outright fraudulent -- they're simply lying about their intentions to charge me a higher rate for their service without disclosing they're billing at a higher rate.

I wouldn't tolerate that from any contracting service -- charge more hourly, or bill by the deliverable, but don't lie to me about how you intend to do the work. I don't care, but I do care you're lying to me.

Protect themselves from what? Uber is under no obligation to charge you any amount based off of route, zone, etc. They can charge you whatever they see fit and pay their drivers whatever they see fit. If you don't like the charge, don't take the Uber! If the driver doesn't like the fare, don't accept it!

In case you haven't noticed this is how ALL middle men make money. They charge more to the end user than they pay for a product.

Even your contracting example makes sense. You pay for a deliverable. Does it matter that it costs them less to get it to you and pocket the difference? Nope. That principle is the backbone of all commerce. You charge more than it costs you to deliver.

in this case the middleman is telling a different story between the user and driver. uber is, allegedly, charging the user a higher price while showing the driver a lower price so that they are pocketing extra money that should be going to the driver. say uber takes 10% off each transaction by contract. if they charge the user $10 but show the driver the ride is $8, then by paying the driver $7.20 instead of the deserved and agreed upon via contract $9.00, then they are skimming "hidden" money. this is highly deceptive.

this is how a middleman in a more seedy emplyment scenario gets their fingers chopped off because they're making extra money on the side from the business transactions.

They're not billing you based on a route, they're billing you based on a destination you select and offering a flat rate for it.

You can take it or leave it.

If circumstances intervene, Uber can easily lose money on a ride but you don't pay more.

Uber is not a metered service.

Why does Uber show a route at all, then?

Again, I don't care if a contractor wants to bill by deliverables.

But to transfer domains, if a software contractor gave me a bullshit list of estimated times to justify a project price, I'd let them go for bullshitting me on the estimates even though I'm okay with the final price.

Just be honest and tell me you want to bill by deliverable, not fudge around with high estimates of a low rate to "justify" it.

They show a route so you can feel safe in the car and know how close you are to your destination.

"27. In the overwhelming majority of transportations, the upfront price is the amount that a User is ultimately charged for the transportation services by the driver. 28. When a driver accepts a User’s request for transportation, the User’s final destination is populated into the driver’s application and the driver is provided with navigation instructions directing him or her to the best route to the User’s destination"

---------

It seems like User sees a price X for a ride and accepts it. The driver might see a price X-y if conditions have changed. Doesn't that imply User agrees to price X and driver to price X-y ? Uber might be able to adjust the price at the end but can they be sued if both party agrees to it before hand?

--------------

"36. Had Plaintiff and the Class known the truth about the Uber Defendants’ deception, they would never have engaged in the transportation or would have demanded that their compensation be based on the higher fare."

------------

I am curious as to how they reached to a conclusion that Uber was intentionally doing this. Did a bunch of drivers co-ordinate experiments with riders to see if there was price differences? Did they just log out and log back into different accounts to see the price differences?

I am neutral to Uber so I feel its natural to question if Uber is seen as an easy target to go after since they are already in a legal swamp. IANAL so would love to read what people familiar with law have to say.

I feel like the question is, if an Uber driver takes longer to arrive due to unforeseen/unforeseeable circumstances, does Uber pay them more than price X? Or is their comp always capped at X?

If they pay more than X, then what Uber's doing is fair-ish. IMO. If the driver can never earn more than X, then that is a problem.

This seems like a tricky case because if the users and drivers are being completely rational, it's not clear that Uber's deception should have affected their behavior. Sure, the drivers expected to make X% of fares, but realistically they probably estimated what that would come out to be not from looking at customer fare data (in which case the deception would have materially harmed them) but rather by tracking what they or other drivers were actually getting paid.

Still, if the allegations are true, a culture where it is fine to engage in such active deception is not a good sign.

UberGo is most prevalent option in India. In UberGo you are shown a fixed final price at the time of starting the trip. This is supposedly calculated based on the best route you will take from point A to B. Def. of best is - cheapest cost - by trading between short/long routes vs traffic congestion on those routes that cost time. But once the rider gets into the car and driver starts google maps, it can show a different route due to changing traffic conditions. Or driver can refuse to follow google maps and use his own judgement on which route is better (for him). In either case, Uber should be transparent and show to both rider and driver the difference between what was initially calculated vs what it actually cost based on the actual trip. But uber does not do this. Instead of they also add another arbitrary/opaque surge multiplier. If at all they have to do any fraud, they are better off doing that "fraud" by showing different multiplier for rider vs driver. Consumer protection law agencies should insist Uber should at least be transparent and predictable in how they determine surge multiplier and their distance/time metering is accurate.

Uber has deliberately fostered a culture that thinks it's acceptable to rip off people and institutions. We should never support companies with behaviour like this.

There should be an app where different services (Uber/Lyft/Gett/Via/Arro (which is Yellow Cabs) bid on a ride and the lowest bid gets the ride. That would help to fix this problem.

In NYC I had noticed that Uber was charging as much as Yellow Cab for some of the trips and I was surprised about their algorithm. Now I understand why.

Google Maps does this in London (at least on Android). Unfortunately, there's no Lyft in the UK and Uber really dominates the market, so it's pretty useless.

There's also services like RideGuru.

Everyone loves a good arbitrage opportunity.

In the thread about Uber retreating from Denmark, people asked why taximeters are sensible regulation. This is the reason. We need a trustable third party that ensures fair transactions. Uber cannot be this because they have their own interests. Regularly checked taximeters can ensure this at least partly.

Yellow cabs in New York have meters that are supposed to be checked regularly. Never the less, I have taken yellow cabs with unquestionably different rates per actual miles and time driven (e.g. same distance/time, different fares, because one taxi's meter was faster).

I assume there's a procedure that you could use to report a particular taxi car/driver, which would put them in a world of hurt for cheating. That's another reason why it's good to have a trustworthy third party there.

There is, at least in theory: call 311. However what's to stop the driver from slowing the meter down before he gets inspected? There's no GPS in the meter, as far as I'm aware, so I don't believe there's a way to truly audit the fares the driver has already taken.

Shouldn't the meters be tamper-resistant though?

They should, and perhaps that's improved in recent years, but it was definitely a common problem as few as 3-4 years ago (from my experience, I've largely switched away from yellow cabs to Uber/Lyft - mostly because the price and experience are vastly more consistent)

I see.

Regardless of what one thinks of Uber, there's no denying that taxis worldwide - not just in the US - totally had it coming.

I have a coworker who reported fraudulent cab driver activity to the TLC. It was an arduous process involving multiple interviews and a hearing, and in the end the driver was fined about $200. Nothing inherently unfair about that process, but it's hardly a world of hurt.

If there is a sudden traffic jam and it takes twice as long, then presumably uber must pay the extra money to the driver. So are the drivers asking for some kind of "flat rate or variable, whichever is greater" contract?

It's not "extra" money, it's contracted compensation.

The driver stuck in traffic doesn't have the discretion to say, "screw this crowd, I'm bailing on this trip to pursue surge pricing in the next neighborhood over."

It seems the drivers are asking for both sides... If up-front is an underestimate, they want the contracted milage/time rate. If it's an overestimate, they want the up-front pricing.

There is no problem with that. Many contracts are drawn up that way. I think it may even offer a great incentive to drivers to make trips faster.

But it doesn't strike my outrage nerve that it's not happening now.

Here's an article about this issue from a couple of months ago, for anyone looking for additional information: http://therideshareguy.com/how-to-beat-ubers-upfront-pricing...

FWIW Lyft's upfront pricing words the exact same way.

This is a non-story and just good product management. This feature solves the problem of presenting a surge multiplier to the customer. With a surge multiplier the customer has to guess how much it's going to cost. With this they just see the price and figure out if it is worth it or not. Reducing purchase friction and uncertainty increases demand and is good for drivers.

Plus, both Uber and Lyft are assuming risk with upfront pricing. They are guaranteeing a price. Sometimes it will be higher and sometimes it will be lower. The driver is accepting a different payment arrangement based on distance and time.

Both companies are classic middlemen and taking advantage of consumer surplus.

If the allegations in this suit are true, fuck Uber forever. They should go out of business, their assets should be stripped from the investors and redistributed to the users, and Kalanick and a bunch of other people should go to jail for fraud. There is no way to overlook the persistent structural problems displayed by this company. Some things could be matters of opinion (like the values of their corporate culture and so on), but there are multiple instances by now of Uber actively choosing to circumvent laws or deceive people on a systematic rather than an occasional or ad-hoc basis. I've rarely seen such a clear chase for revocation of a business license.

If they can prove it, this is super shady on Uber's part. Reminds me of Michael Bolton's money making scheme in Office Space.

It also doesn't speak well to Uber's reputation that I have no problems whatsoever believing that this might be happening. Compared to all the other unethical stuff that they've done (such as Greyball), I can totally believe that they'd do this as well.

If it's possible for both the rider and driver to see the forecasted route at the time of hailing, it should be pretty simple to throw together evidence to show that different pathfinding is in use.

I celebrate his entire catalog.

https://en.wikipedia.org/wiki/Salami_slicing

Reading what they actually did (or accused of doing, technically), it's not shady at all.

If they business model is based on breaking local laws, why would anyone expect them to deal ethically with them?

Uber's side of that story is that the local laws created unjust monopolies with uncompetitive pricing and poor service. For the most part, at least in the US, they weren't wrong.

Airbnb is also based on skirting regulations and has not been the subject of the kinds of complaints of misconduct from users, service providers and employees that Uber has. This suggests to be that the problem is specific to Uber rather than being inherent to companies that use new business models that don't fit into existing regulatory frameworks.

I'm sure gun runners tell themselves they're just helping innocent people protect themselves. If your basing your company on the idea that it's is above the law then I guess you have to ask where's the line. What laws do you follow and which ones do you ignore. to me it seems like a slippery slope.

There are actually terms in law for drawing such a distinction: malum prohibitum and malum in se.

Malum prohibitum means "bad because forbidden". It includes most regulatory law, requirements to have licences to do things, drug prohibition, etc.... Some of these prohibitions are probably necessary to have a society people actually want to live in, but many are more debatable and some actively make society worse. Prohibited conduct varies greatly between jurisdictions.

Malum in se means "bad in itself". It concerns directly causing harm to others. While some edge cases vary, almost every legal jurisdiction has general prohibitions on murder, rape, theft, fraud and such.

I'm not aware of any significant controversies in which Airbnb has been accused of the latter, nor Lyft. I think most people can tell the difference between skirting regulations that many people honestly believe don't serve the public interest and tolerating sexual harassment or deceiving contractors.

AirBnB has been subject to even more complaints from neighbors and competitors than Uber, though.

If anything, that reinforces my point: a business model based on this type of disruption does not seem to imply bad behavior in other aspects of its operation.

I am not sure about the legality here, but I will say that I see this arrangement as good for both the driver and the passenger.

As a passenger I can know exactly what I'm paying ahead of time, and don't have to worry about my driver intentionally increasing the time/distance of a trip to charge me more.

As a driver, you are compensated on a time/distance basis, which means you don't have to worry as much about special requests/traffic/other issues messing with what you earn.

Uber is the one accepting the risk here, which the chance that the payout to the driver exceeds the flat rate the passenger paid because of an extra long trip.

Even if it is read charitably, as you have done, that really damages Uber' claim that it's a effectively just a middleman connecting independent contractors with customers. By doing this, Uber is much more than a mere ride arranging service and, instead, they're actively reducing risk and manipulating both sides – something a mere middleman wouldn't do.

Another thing: If Uber really wanted to charge their customers more, they could just raise their rates relative to distance (which would be identical to the user since they only see the final fare and not the components of it). I think they probably just pick a long route to be conservative in the time estimate they give to the user.

No this doesn't happen. Some people may think that Uber charges the rider a different rate than the driver receives but it isn't the case.

A driver I had was sure this happened and asked me that on a fairly expensive trip (I think it was around $80).

I told him this didn't happen and I gave him my personal phone number and the amount of fare I was charged. I told him to check his daily numbers and if he didn't see this charge then to call me immediately. He never did.

Well I guess that's settled, then.

And if he had called you, you would have done... what, for him, exactly? Paid for a lawyer on his behalf? Given him a living wage while he was blackballed by Uber after suing them?

Even if he uncovered an error, he probably would have concluded that calling you would have done nothing. Absence of evidence is not evidence of absence.

I work for Uber. I would have tried to figure out wtf was going on because that's not how we do business, as far as I know.

It wouldn't be very sophisticated if that's all it took to discover fraud.

Hmm.. So in my area where Lyft is always expensive 20-30% more than Uber. I don't know how much these Lyft guys are stealing ?

This is all very interesting, but Uber has pretty robust arbitration and class action waiver clauses in their contracts, both with the users and the drivers. Sadly, this will go to arbitration on an individual basis pretty quickly. I haven't seen Uber lose a motion to compel (except once in S.D.N.Y., but it was quickly reversed on appeal).

If, at the same time, driver and customer are being shown different prices, as the article alleges, then that is a problem.

If the price is an estimate, and the estimate is revised based upon actual time and distance, then that is within reason.

That said, this problem would be much more tractable if the drivers were employees of Uber. Perhaps that's what should be done? :)

I've used Uber in NY, CA, and FL in the past 6 months. Every time I've done so I was shown exactly the price that I would pay up front. It's a static price. I pay that amount to go from X to Y, regardless of minutes, miles or extraordinary circumstances.

I have no idea what the driver's compensation is based on but it isn't transparently obvious to me that it would be fraudulent for Uber to offer me a static fare that, over the course of the ride, turns out to be different to the value of that ride to the driver.

Imagine: When I am offered a fare based on expected traffic that doesn't materialize, the miles+minutes value to the driver is well under what I paid. Other times, when I hit unexpected traffic, I pay Uber less than they pay the driver because of the extra minutes.

I'm not saying "this wasn't fraud". I'm saying, "I can imagine a pricing and reward scheme by which it's not." If at some point Uber said to drivers "We take an x% cut of the fare.", then yes, it seems clear that drivers would be defrauded by the scheme. Maybe we'll get to find out :).

edit: Other comments have links indicating that my "x% of fare" idea may, in fact, be in Uber's contract with drivers.

At this rate, soon Uber will be a verb. Unfortunately, associated with all the wrong things.

a la "...just don't uber it..."

The issue is with the agreement with Uber driver's, if Uber is changing the terms of the relationship without letting them know and agree to it, then that's a major violation of the contract and Uber could see a massive labor lawsuit.

This seems entirely appropriate and not fraud. For a flat rate, you're charged based on a somewhat longer, non-ideal route, rather than the optimal route which you'll take if everything goes well.

I have to think this is not their mode of operation, but if it is, what the hell, Uber? If they actually do something like this as matter of course, goodbye. That's just unacceptable and very dirty.

Are we worried that shady behavior that hurts consumers and riders might become the new equilibrium? I don't see how it could be. Whatever the machinations of Uber to artificially alter prices, no matter how sneaky, at the end of the day they'll lose drivers and riders to competitors if their margins drift too far from the economic cost of being the middle man. A driver don't need to know in what way he or she is being lied to or maniuplated to know that they make less per hour driving for Uber than for [Uber's next best competitor]. Thus, I don't see how there could be an equilibrium where Uber is overcharging and still has a significant portion of the market.

Leaving it consumers to worry about fraud is not how you create a functioning market economy. The real equilibrium in places where fraud isn't punished is you rely on the market as little as you can and everyone is poorer as a result. Fraud is illegal for good reasons.

The whole point of "network effect" strategy is to render this analysis untrue.

I have no sympathy for Uber, but it does start to feel like someone is out to get them, the guys just can't seem to catch a break.

I heard that Uber is more likely to give you surge pricing if you are running out of battery. Might be a rumor.

I'm no lawyer but I understood "fraud" to be misrepresentation. Who is being defrauded? The passenger pays one price, the company pays the driver and takes a bit of that fee. The company is defrauding the driver by not telling him the full fee the passenger is paying? If they word it such as: "A % of the fee and other fees", I don't see fraud. Not a lawyer.. feel free to correct me.

So, to both parties, they are under-promising on an unknowable future event.

that is better than over-promising?

i don't see the issue here.

Updated description for a start-up: "We are like Uber, except for the lawsuits."

jesus christ hacker news has a fucking erection for anything anti-uber, get over yourselves, they provide a taxi service that actually helps people

They probably will blame this on previous executives...

We walk a thin line between deception and incentives.

All it takes is a tiny tiny line in the terms of use that states that the fare differences can be different between client side apps.

The user isn't paying the driver, they are paying uber. The driver is paid by uber under a separate agreement.

So it honestly doesn't matter.

Ars Technica Uses Sensationalist Headlines And Shallow Understanding Of Subject Matter To Defraud People Into Reading Their Articles

Oh, come on.

I doubt it's all that sophisticated.

One good way to make sure the fare matches the distance would be to install some sort of device that measures mileage. The driver could start the device when the ride starts and turn it off when it's over. It could even calculate and display the fare for both parties!

Of course that kind of transparency wouldn't be possible unless all the vehicles had the device. So you'd probably need a licensing system for them. Which in turn could be overseen by a commission made up of industry reps and local government officials to ensure fairness and local control.

Wild ideas man, wild ideas.

Ha ha ha.

Half the problem is that drivers are being paid based on exactly such a device.

And your second paragraph is just a series of non-sequiturs. You're stretching too hard to make the cute analogy. Measuring doesn't imply that all vehicles need it. Nor does that in turn imply the need for a licensing system.

I was making leaps because everyone sees it coming and it's boring. No need to make it longer.

I don't think analogy is the word you're looking for.

I couldn't think of a better one in less than a minute. Do you have word suggestion? It's pretty close to an analogy, as a hypothetical mirror from one part of reality onto another.

Hmm no, now that you mention it. The technique probably has a name, but if it does, I don't know it. That's going to bother me now. Basically just describing existing commonplace conditions (the taxi industry) as if it were some crazy new idea, for ironic effect.

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