This is a returning and soon to be weekly column that offers news, insights, analysis, and user tips for rideshare platforms like Uber and Lyft.
If you’re in an Uber market with upfront pricing, where you see exactly what your ride is going to cost you before you request it, you’re being overcharged.
Over the past year or so, drivers have been reporting that the fare their passengers pay is often higher than the fare that their pay is calculated from. The original reason for the discrepancy, they figured, was that Uber was simply ripping them off. That would be old news; just about any driver that’s been around long enough to remember the “Winter Warm-up” rate cuts would agree that Uber exists solely to rip them off. It’s a statement of fact, right up there with the sky being blue.
Upon further research however, it turned out that the drivers weren’t being ripped off–at least not technically. Their fare was being accurately calculated based on the time and distance drove. So what was the passenger paying extra for? If the riders I talked to about it are a representative sample, they’re paying for the added security that they won’t be overcharged if their driver takes a wrong turn or misses a freeway exit. Fair enough, but at current rates it would take a spectacular amount of negligence (like a five-mile detour) to run up an overage on the level represented by Uber’s prices. It seems like the company is just pocketing the extra money without even telling anyone that it exists.
Smarter drivers have responded to these pricing irregularities by “long-hauling” their riders in markets where up-front pricing exists, like here in Los Angeles. This is actually a known trick used by some taxi drivers where they intentionally take a longer route to a destination in order to run up the fare (and why I’ll never take another cab from the Las Vegas airport again). In the case of Uber, however, the fare is set in stone so they can’t actually change what the rider pays. Instead, they’re cutting into that extra padding that Uber is giving itself so that what they’re paid is more in line with what the passenger is charged. You could argue that it’s still unethical, but I’ve yet to meet a driver with any scruples about stealing from a company they believe is robbing them blind.
Other drivers decided to take a different tack, filing a class-action lawsuit last month (full disclosure, I’ll likely be part of this class). Perhaps in response to this legal challenge, drivers got a very interesting email in their inboxes last week:
| Making Earnings Easier to Understand |
| Hi Sekani,
Our commitment to you is to be clear and straightforward about your earnings. We’re making a number of changes that will make your earnings easier to understand and access. We will also be updating our driver partner agreement to more clearly reflect the way you earn. This will take effect on Monday, May 22nd. These updates will not change your earnings. This is not a rate cut. You’ll earn the same amount, for the same trip, on Monday, as you do today. Here are the changes we’re making: |
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| As part of our effort to make earnings straightforward and easy to understand, we’re also updating our driver partner agreement . These changes reflect that there are times when what a rider pays may be higher or lower than what you earn for a trip. Separating rider payments from driver fares allows us to keep your rates consistent, while offering new ride options like subscriptions. You’ll continue to earn based on the minimum and/or base fare, time and distance rates, plus applicable promotions as you do today. The next time you go online you’ll receive an in-app notification and agreement request for the updated driver partner agreement.
To experience these updates you will need to update your driver app. Please update to the latest version of the Android or iOS app before May 21st. After that, updating your app will be required to go online and drive. We hope these changes will improve your driving experience and provide more clarity about your earnings. Thank you for choosing to drive with Uber. |
The interesting part here isn’t the focus on increased earnings clarity, it’s the paragraph near the end where Uber admits that “there are times when what a rider pays may be higher or lower than what you earn for a trip.” Not only that, but there’s going to be a new driver agreement which explicitly states that drivers are not entitled to any additional payment when the what the passenger is charged and what the driver is paid doesn’t match up; the company says it’s what allows them to offer discounts and promotions like the UberPool passes. Nice spin job.
All of this leads up to the recent news that you’ve probably heard about by now, where Uber officially acknowledged the fare discrepancies and said that the reason was because they were losing too much money. But get this: the company line is that they needed the extra cash to fund driver incentives. On the surface it seems like a brilliant bit of PR spin–in the politically progressive markets where Uber does most of its business, what could go over better than the idea of intentionally overcharging wealthier clients to better compensate drivers who have long complained about getting the short end of the economic stick? Besides, at least this way they won’t have to worry about silly things like pricing transparency, who wants that these days, right?
To be honest, it’s unclear if this revelation will realistically affect Uber’s passenger numbers. If nothing else in 2017, we’ve learned that if you give people a service that’s so convenient that it becomes a vital part of your life (ask anyone who’s visited Austin lately how many hoops they’ve jumped through just to figure out how to get from one place to another) they’ll forgive pretty much anything in order to keep it around. As for drivers, as much as they hate to admit, they’ll keep driving for Uber as long as that’s where all the business is. Hopefully one day Lyft will actually become a viable alternative for more drivers… but by then they’ll probably become just as evil. That’s the way it seems to always work.
Sekani Wright is an experienced Lyft driver working in the Los Angeles metropolitan area. If you have any questions you would like answered for this column, you can contact him at djsekani at gmail dot com, or on twitter and reddit at the username djsekani. Have a safe trip!