9 ms·

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

by tyre 10y ago

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.

deleted 10y ago
[deleted]
mfringel 10y ago
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.
- richardwhiuk 10y ago
  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.
  - baloneyman 10y ago
    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
    - cwyers 10y ago
      But they aren't. They're paid per minute and per mile.
      - deleted 10y ago
        [deleted]
      - Retric 10y ago
        Which only works if they are employed by Uber, if they can't be independent consultants unless they have freedom to select their route.
        inverse_pi 10y ago
        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?
        Retric 10y ago
        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 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.
        linkregister 10y ago
        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.
- bcoates 10y ago
  How would I, a passenger, even know what Uber's rake is? It's not shown anywhere.
abduhl 10y ago
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.
- tyre 10y ago
  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.
  - abduhl 10y ago
    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.
nevir 10y ago
> 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
- eric_h 10y ago
  Ever since Uber added this feature, the fare charged to me has never differed from the estimate unless I changed the destination mid-ride.
beejiu 10y ago
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.
- ballenf 10y ago
  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?
  - ohyes 10y ago
    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.
    - deleted 10y ago
      [deleted]
    - zaroth 10y ago
      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.
    - 10y ago
rewrew 10y ago
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.
nerdponx 10y ago
This is why taxis in NYC have standardized fare meters, and very explicit regulations surrounding their use.
adamsea 10y ago
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."
- tyre 10y ago
  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!
  - ajross 10y ago
    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.
    - tyre 10y ago
      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-cross-selling-and-bitcoin-etfs https://www.bloomberg.com/view/articles/2017-03-13/spoofing-...
zaroth 10y ago
> 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.
- inverse_pi 10y ago
  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.
- travisp 10y ago
  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"
linkregister 10y ago
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.
- lavezzi 10y ago
  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.
ramblenode 10y ago
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.
tomc1985 10y ago
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?
rbcgerard 10y ago
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.
kafkaesq 10y ago
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.
bingomad123 10y ago
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.
nakovet 10y ago
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?
- asher_ 10y ago
  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/ 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.
  - usrusr 10y ago
    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.
ggggtez 10y ago
>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.
pyrale 10y ago
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.

by tyre 10y ago

deleted 10y ago

[deleted]

mfringel 10y ago

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.

richardwhiuk 10y ago
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.
- baloneyman 10y ago
  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
  - cwyers 10y ago
    But they aren't. They're paid per minute and per mile.
    - deleted 10y ago
      [deleted]
    - Retric 10y ago
      Which only works if they are employed by Uber, if they can't be independent consultants unless they have freedom to select their route.
      - inverse_pi 10y ago
        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?
        Retric 10y ago
        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 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.
      - linkregister 10y ago
        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.
bcoates 10y ago
How would I, a passenger, even know what Uber's rake is? It's not shown anywhere.

abduhl 10y ago

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.

tyre 10y ago
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.
- abduhl 10y ago
  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.

nevir 10y ago

> 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

eric_h 10y ago
Ever since Uber added this feature, the fare charged to me has never differed from the estimate unless I changed the destination mid-ride.

beejiu 10y ago

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.

ballenf 10y ago
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?
- ohyes 10y ago
  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.
  - deleted 10y ago
    [deleted]
  - zaroth 10y ago
    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.
  - 10y ago

rewrew 10y ago

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.

nerdponx 10y ago

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

adamsea 10y ago

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."

tyre 10y ago
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!
- ajross 10y ago
  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.
  - tyre 10y ago
    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-cross-selling-and-bitcoin-etfs https://www.bloomberg.com/view/articles/2017-03-13/spoofing-...

zaroth 10y ago

> 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.

inverse_pi 10y ago
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.
travisp 10y ago
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"

linkregister 10y ago

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.

lavezzi 10y ago
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.

ramblenode 10y ago

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.

tomc1985 10y ago

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?

rbcgerard 10y ago

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.

kafkaesq 10y ago

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.

bingomad123 10y ago

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.

nakovet 10y ago

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?

asher_ 10y ago
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/ 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.
- usrusr 10y ago
  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.

ggggtez 10y ago

>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.

pyrale 10y ago

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.