Uber settles charges with feds

Source: Drivers taken for a ride: The dark side of Uber

The ride-sharing phenomenon has hit the nation by storm in the past few years. Coming from what was virtually unknown a decade ago, companies like Uber and Lyft have carved a business worth an estimated $40 billion worldwide, according to Reuters.

Ride-sharing companies, though, must depend on the availability of privately owned vehicles and drivers willing to transport passengers. That means being able to convince vehicle owners their efforts will reap financial rewards for driving, and in some cases, enticing drivers to lease a vehicle to be used for ride-sharing services.

But last week, the Federal Trade Commission presented San Francisco-based Uber Technologies with a $20 million invoice to settle charges that the company exaggerated how much money drivers could make, and that the company made false promises to potential vehicle owners. With almost unprecedented speed, Uber paid the FTC on the same day the settlement was announced.

“Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a news release Thursday. “This settlement will put millions of dollars back in Uber drivers’ pockets.”

Specifically, the FTC alleged Uber “exaggerated the yearly and hourly income drivers could make in certain cities and misled prospective drivers about the terms of its vehicle financing options.”

For example, the agency alleged that Uber promised drivers they could average more than $90,000 in New York and more than $74,000 in San Francisco, while the actual median income was closer to $61,000 in New York and $53,000 in San Francisco. “In all, less than 10 percent of all drivers in those cities earned the yearly income Uber touted.” In addition, the FTC alleged that Uber repeated this pattern in a number of cities.

Uber also agreed to settle FTC charges that its Vehicle Solutions Program (through which Uber drivers could purchase vehicles) would provide drivers with the “best financing options available,” regardless of the driver’s credit history, and told consumers they could “own a car for as little as $20/day” ($140/week) or lease a car with “payments as low as $17 per day” ($119/week), and “starting at $119/week.” The agency alleged the actual lease payments exceeded $160 and $200, respectively, well over what consumers with similar credit scores would have to pay.

For its part, Uber admitted no wrongdoing, but in a statement emailed to the Chicago Tribune, a spokesman acknowledged the settlement. “We’re pleased to have reached an agreement with the FTC,” said Uber spokesman Matt Kallman. “We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule.”

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