>>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.

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.

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.

Tangentially, I don't think the last sentence in your third paragraph is a fair characterization and, frankly, unhelpful to your argument. I wasn't purposefully "concocting a hypothetical fantasy." I misunderstood Uber's relationship with its drivers, which I should have done more research on, but a simple correction would have sufficed.

[0]: Specifically on page 4, in sub-section (16) of https://arstechnica.com/wp-content/uploads/2017/04/uberdrver...

Brokerage and exchange fees are all set in advance and known by parties involved in the deal. What Uber does would be a fraud on financial markets.

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!

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.

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-...

This, to me, is the critical point from the rider side.

If drivers were ever told something along the lines of "We, Uber, take an x% cut of the fare" then I can see a court deciding that drivers were defrauded by Uber when they misrepresented what the user paid.

[0] Page 4, sub-section (16) of the court documents https://arstechnica.com/wp-content/uploads/2017/04/uberdrver...

In which case we'll see Uber, a company that seems set on self-destruction at this point, pay a moderate settlement that's unlikely to be material compared to their funding.

I don't disagree with the overall sentiment that this seems like a non-issue.

However, the driver doesn't see the route, price, then agree to it. They see a pickup point of a passenger and agree to that alone. My understanding is that this is all the information they have when agreeing to a ride. It's a feature to prevent drivers being picky about passengers based on their trip value. It's one of the more important features to me. I've lived in two cities where cab drivers ask where you're going before letting you into the car for exactly this reason. In both cities it is both illegal and common practice.

The most charitable form of this same argument, assuming I've got my facts straight, seems to be: You've driven for Uber for >=1 ride and have a grasp on the reward structure and have chosen to continue doing the job in exchange for said reward structure.

The arbitrage between the shorter path and the longer path represents an undocumented fee given to Uber for no additional service rendered.

Source: http://www.investopedia.com/articles/active-trading/042414/w...

They are not like a broker in that they do not advertise performing a transaction (whose price is known) at a certain fee. If your brokerage offers to sell 100 shares at $1, with a $5 fee, you know how much of the $105 should be going to whom. Uber only tells you a single, flat price.

Not sure if the top level poster didn't read that part or just doesn't get it...

https://www.uber.com/info/how-much-do-drivers-with-uber-make...

Drivers using the partner app are charged an Uber Fee as a percentage of each trip fare.

I recently took a ride in SF where I asked the driver if we could stock for fast food along the way (I had just had a 6 hour flight and I can't eat on planes for fear of motion sickness). He said that a few months back he would have said yes but now that Uber has an upfront ride cost he wouldn't make any money while were were sitting in the driver through line. I had to eat so I offered $15 on top of the fare, great results, would ride again.

edit: It occurs to me that while users are offered a static fare, drivers could still be paid based on miles and minutes. That's obviously not how the driver in my example understood his compensation but it _could_ be the case.

If riders are quoted a longer than optimal route, then that appears to be deceptive to me.

If you contracted me to install cabinets in your kitchen, I couldn't defensibly take 1 year to install them, if I estimated 3 days. This doesn't make all cabinet installers employees.

Further the scoring is separately done by the customer. So the conversation is "Can you take the scenic trip? Sorry can't." Further it goes that way because Uber drivers are employed by Uber not independent contractors connected by Uber to customers.

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.

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.

> 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"

  This latest lawsuit claims that Uber implemented
  the so-called "upfront" pricing scheme in September
  and informed drivers that fares are calculated on a
  per-mile and per-minute charge for the estimated
  distance and time of a ride.

Another key question -- what if Uber underestimates due to changing traffic conditions? Does the driver get underpaid? I doubt it.

So of course the estimate is going to be conservative. So what's the contract say? Probably pretty clearly drivers are paid on actual miles and minutes and not Uber's estimate. I mean, if drivers were paid on the estimate, Uber would still probably be getting sued because it is sometimes low.

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?

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.

The driver gets paid for miles and minutes. Moreover, if say something unexpected happens, say traffic, Uber will eat the difference.

I mean if uber loses the lawsuit, they are simply going to change the T&C with the driver so that all rides are preset, and the driver will be paid the estimated rates, and drivers will get screwed when there's lots of traffic.

In any case, technically everyone is getting screwed and they likely end up sharing whatever the markup is. (Driver loses wages, user pays more).

let's say that Uber posted really unreasonably fast times for the given route instead. Would you then argue that uber could systematically pay the drivers a lower rate, because that's the fare they pitched to the passenger?

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.

Uber tells passenger the ride will cost $5.00 Uber tells driver the ride will cost $4.00 (from which Uber takes a cut) Uber pockets the entire $1 difference.

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?

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..., 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.

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.

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

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.

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.

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

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.

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.

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.