Why Uber is preparing to shell out $28.5 million to riders

The polarizing ride-hailing company is looking to settle claims that it misled consumers about safety ahead of another civil case scheduled to go to trial in June.

Seth Wenig/AP
Uber drivers, including Bikash Tamang (c.), participate in a rally in front of an Uber office in New York, on Feb. 1. Some Uber drivers in New York City say they are going on strike to protest the company's decision to cut fares in the city by 15 percent.

The ride-hailing company Uber announced on Thursday that it will pay $28.5 million to settle two class action lawsuits.

The embattled company has come under fire for misrepresenting its safety procedures. The lawsuits asserted that the company's description of the $2.30 "Safe Rides Fee" as funding "industry leading" background checks on drivers is misleading because the company's drivers are not subject to fingerprinting like taxi drivers.

As the company prepares to settle the lawsuits, it maintains that Uber does offer safety features, including GPS trip trackers. The company also shares driver photos and license plate information with riders.

Although the federal judge in this case must still approve the deal, Uber is prepared to offer the more than $28 million settlement to approximately 25 million individuals who used the ride-hailing service between 2013 and 2016.

Uber would also have to rename its “Safe Ride Fee” to a “Booking Fee.” The company is careful to remind users that no mode of transportation is totally safe. "Accidents and incidents do happen," Uber said. "That's why it's important to ensure that the language we use to describe safety at Uber is clear and precise.”

Although the settlement must still be approved, Uber is eager to move on. "We are glad to put these cases behind us,” said the company in a statement, “we will continue to invest in new technology and great customer services so that we can help improve safety in the cities we serve."

The consolidated lawsuit is named Matthew Philliben et al. vs. Uber Technologies Inc and Rasier LLC, 14-5615.

This is not the first time Uber’s safety policies have been called into question. District attorneys in San Francisco and Los Angeles both made similar allegations in a separate 2014 case, which is still pending.

In 2014, San Francisco District Attorney George Gascon argued that Uber relied on drivers to provide information about themselves to the company, which then contracted to a third party background check service. It would be very easy for drivers to misrepresent themselves, negating the value of Uber’s background checks, he said. On Thursday, San Francisco Superior Court judge Mary Wiss rejected Uber’s request to have that suit dismissed.

Uber’s rival, Lyft, faced a similar lawsuit in 2014. Lyft paid just $250,000, but was also forced to stop touting the security of its background checks.

Uber is facing deeper legal troubles. The company is scheduled to go to trial in another lawsuit this June. This later lawsuit was filed by Uber drivers, who claim they should be classified as employees and granted benefits.

Taxi drivers around the world have also objected to the Uber app, saying that the company should have to face the same regulations and fees that taxi drivers do, worldwide. Taxi drivers have gone on strike in locations as disparate as Paris, France, and Cambridge, Mass.  

This report contains material from Reuters and the Associated Press.

[Editor's note: This article has been corrected to reflect the fact that a single 2014 case brought against Uber by San Francisco and Los Angeles is still pending and to clarify in which case Judge Wiss rejected a dismissal request from Uber.]

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