Uber: We don’t have to pay drivers based on rider fares

Contracts allow rider fares to be higher than what is known and paid to drivers.

DAVID KRAVETS - 9/18/2017, 4:30 PM

Uber is fighting a proposed class-action lawsuit that says it secretly over charges riders and under pays drivers. In its defense, the ride-hailing service claims that nobody is being defrauded in its "upfront" rider fare pricing model.

The fares charged to riders don't have to match up with the fares paid to drivers, Uber said, because that's what a driver's "agreement" allows.

"Plaintiff's allegations are premised on the notion that, once Uber implemented Upfront Pricing for riders, it was required under the terms of the Agreement to change how the Fare was calculated for Drivers," Uber said (PDF) in a recent court filing seeking to have the class-action tossed. "This conclusion rests on a misinterpretation of the Agreement."

The suit claims that, when a rider uses Uber's app to hail a ride, the fare the app immediately shows the passenger is based on a slower and longer route compared to the one displayed to the driver. The rider pays the higher fee, and the driver's commission is paid from the cheaper, faster route, according to the lawsuit.

Uber claims the disparity between rider and driver fares "was hardly a secret."

"Drivers," Uber told a federal judge, "could have simply asked a User how much he or she paid for the trip to learn of any discrepancy."

A contract is a contract

Uber doesn't consider its drivers employees, and it doesn't call their pay "commissions." Instead, it allows drivers to keep the fare presented to them in the Uber driver app, even if the fare is different from what the rider was charged. The driver then pays Uber a "service fee"—a percentage of the fare earned by the driver.

The San Francisco-based ride-hailing service also claims that it took "significant risk" under this "upfront" fare pricing model, which began last year.

Plaintiff further alleges that, after Upfront Pricing began, Drivers continued to earn based on the trip’s distance and the amount of time it actually took to complete the trip. Plaintiff claims the Upfront Price is often higher than the Fare, which is the basis of what is remitted to him. He neglects to mention, however, the significant risk placed on Uber, not Drivers, by Upfront Pricing: the User’s Upfront Price may just as easily disadvantage Uber, for example, where an actual trip takes longer than expected, yet the Driver’s earnings calculation remains constant.

What's more, a rider might also pay Uber more than what the driver's fare is based on because a driver's contract allows Uber to "adjust" the fare known and paid to the driver, according to Uber's legal filing.

"The Agreement allows Uber to adjust the Fare under various circumstances. For example, Uber is permitted to make changes to the Fare Calculation based on local market factors," Uber said in its federal court response. "Likewise, Uber may adjust the Fare based on other factors such as inefficient routes, technical errors, or customer complaints."

And here's the kicker:

Drivers disclaim any right to receive amounts over and above the Fare produced by the Fare Calculation.

The suit, which seeks class-action status, demands back pay and legal fees. It wants a Los Angeles federal judge to halt the alleged "unlawful, deceptive, fraudulent, and unfair business practices."

A hearing is set for December 1.

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DAVID KRAVETS The senior editor for Ars Technica. Founder of TYDN fake news site. Technologist. Political scientist. Humorist. Dad of two boys. Been doing journalism for so long I remember manual typewriters with real paper. EMAIL david.kravets@arstechnica.com // TWITTER @dmkravets