Uber are due to settle a complaint by the Federal Trade Commission for $20 million. The payment relates to accusations that the company misled taxi drivers about potential earnings and the cost of vehicle financing.
Reports allege that Uber promoted misleading figures relating to the amount of income drivers could generate via their app. The false claims are said to have been advertised across 20 cities in the U.S. In New York City drivers were lead to believe they could earn up to $90,000 a year in San Francisco the amount was $74,000.
Uber are not admitting wrongdoing. However they have agreed to pay $20 million to settle the matter. The FTC will be pass on the compensation to affected drivers.
Uber had promised to arrange the best available financing offers for drivers to help them own or lease a vehicle. Yet the rates drivers received were less competitive than those any consumers with a similar credit score could have obtained. Banco Santander’s auto loan division – who Uber had been working with up until 2015 – were later embroiled in a scandal that involved the issuing subprime loans for vehicle financing.
Going forward Uber will provide compliance reports to the FTC on a frequent basis that includes marketing copy and driver earning reports. This should help prevent similar problems in the future as legal action relating to alleged false claims has been a reoccurring issue for the firm.
Previous law suits have included accusations of inappropriate marketing of its safety record to passengers and misleading passengers about 20% tips for drivers.
Uber UK Takes Drastic Action
In order to stave off further protests and law suits regarding their drivers’ employment status Uber are developing a host of employee benefits. Uber have approximately 40,000 drivers signed up to their app in the UK who will be provided with a package or perks with the intention of helping drivers maximise their earnings from the e-hail app.
Many new areas of functionality aimed at appeasing unhappy drivers are being developed including:
- Discounted ISAs and pensions as well as earnings advice.
- Free language classes.
- A service that provides journeys with customers who are heading in the direction of their home towards the end of their work hours.
- A new appeal process for drivers who have been removed from accessing the app due to misconduct.
- A system that enables drivers to collect their income instantaneously rather than wait for a weekly payment.
Uber’s Regional General Manager for Northern Europe, Jo Bertram, described the reasoning behind the measures,
“Over the last year we’ve listened to thousands of drivers across the UK and that’s already led to improvements like the driver destinations feature”
However the action is likely to have been provoked by last October’s defeat in an employment tribunal that found in favour of two Uber drivers. The court ruled that drivers are entitled to employee rights led despite Uber considering them to be self-employed.
Legal expert at the GMB union, Maria Ludkin, that supported the drivers’ legal case considered the American firm’s latest offerings to be too little too late,
“Free English lessons and updated community guidelines are not going to address the issue of paying workers below the minimum wage.”